5 Things to Consider When Raising Prices
4) Have integrity.
Prices will continue to go up. Bread is no longer a nickel, a gallon of gas is no longer $.35, and you can no longer buy a house for $3,000. Still, you must have integrity, a logical reason for raising prices and appreciate how the customer will react.
I will never forget my first customer service job. Our new, “turnaround expert” VP of sales came to me explaining that sales were way off and that I needed to double the price on a custom product we made for one of my customers. As a green-behind-the-ears 23-year-old, I said, “Okey Dokey Boss! I’ll do my best to be nice as I drop the bomb.”
I called the customer back with a $180,000 price instead of the normal $90,000. It went over like a lead balloon. The company had no other choice but to accept the price because we were the single source. Its buyer did say she would get even, felt betrayed and would proactively look for a second source. My employer was short sighted, I lost confidence in my employer, and I left within a year.
5) Try gradual price increases over time whenever possible.
The key is to have discipline in raising prices slowly whenever possible, or at least having a method to your madness. Also, be ready to explain the reasons for the price increases if you are asked.
Netflix has had two significant price increases in a year and customers noticed. I don’t fully understand why it couldn’t increase prices in small increments over time. I’m not a movie guy. Maybe the company doesn’t have the luxury just like the printer I referenced above, but whenever possible you should try to keep your pricing up with inflation and rising costs, instead of waking up one day and noticing that you’re way out of whack and now need to get back in line with a singe huge adjustment.