For those of us who have our own businesses or work in corporate America, the idea of a price increase isn't new. In fact, annual price increases are one of the fastest ways for you to earn a few extra dollars to improve margins and cover growing costs.
As marketing professionals trying to sell around price increase, we more often find that traditional campaigns become less effective. All it takes is one heavily weighted variable to have a negative impact on campaign performance. This is especially true when we hear objections from our customers and are unable to fully justify the increase. With few changes to a given product the prospect of creating value is limited.
One of the biggest concerns that marketers have about price increases is that of customer attrition. This is especially true in markets where your competitor is priced are lower or about the same as your offering. There is always someone else that your customer can buy from. A recent study I read indicated that even though price can be an obstacle to buying, current customers are less likely to leave you after a price increase.
Many factors determine whether or not a customer is going to start buying from a competitor. In any given market than can be thousands of competitors and in others only 2. But keep in mind that switching has emotional and financial costs.
Your customers, and all consumers for that matter, have been conditioned to find the lowest price possible for any given product or service. When rolling out a price increase, customers do not want to pay full price. This is why they continue to ask for discounts even after a price increase has been put into affect.
Here are some ways to overcome objections related to price increases:
Articulate value that is greater than or equal to that of your actual price increase. No one wants to pay more money for the same old thing. It is very difficult to justify given the current state of the economy and the growth of a competitive landscape.
Know the cost to switch vendors. Research your competitors and understand their pricing. Does the offer they use clearly explain the pricing of their product? Your customer may perceive a competitor as costing less but in actuality their services cost much more or provide less features. Do your homework before introducing any type of price increase.
Do not treat all customers equally. I know it is taboo today to say such a thing but not all customers are equal. Some have been with you a long time. Others are working with you for the first time. Your price increases should reflect the individuality of your customers and the impact you wish to have. Consider treating customers differently.
The final bit of advice I can give around price increases is that you should really understand your competition and what types of alternatives are available to your customer.
If your company offers a better package at an equal or more favorable price, the notion of losing droves of customers over a single price increase really is not an issue. If your offering is less valuable however then investments may need to be made to enhance the product or simply revisit pricing.
About the Author:
Michael Fleischner is an Internet Marketing Expert with more than 13 years of marketing experience. He is an author and founder of The Marketing Blog. Explore his search engine optimization book, SEO Made Simple, to enhance your internet business.
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