56, Raise your prices without raising customer ire|
Posted by BizDoc, Mon Aug-09-10 04:12 AM
Excerpted from the Ingenious Business Guide - bizmd.blogspot.com
In a previous post at bizmd.blogspot.com, I shared why your prices were probably too low and how you're leaving money on the table. If you've ever worked at a business when it raised its prices, you probably endured grumbles from customers. Justifying the increase becomes so exhausting that many merchants take the path of least resistance and just absorb increased costs. But what if you could raise prices and avoid the grumbles?
One technique my firm developed to increase prices without risking upsetting or losing clients we named the Grandfather Discount. It goes like this: raise prices immediately. Then for six months agree to grandfather all loyal clients under the old rate. Let these clients know you'll discount the new price back to the old one during this six months.
When the client reads the invoice the new item price will stare at them from the top line and the net total from the bottom. They won't mind the increase because they won't be paying it yet. But each time they repurchase they'll be reminded of the new price and they'll have time to get used to it. During this grandfather period, subconsciously they will be revising upward the value they are receiving to reflect this higher price.
After six months, eliminate the discount. By removing a reduction instead of adding an increase, the customer feels they were benefited six months, not penalized going forward. And by raising prices immediately, all new customers will pay the higher price. So you'll earn extra profit on every new sale starting immediately. We instituted this program ourselves and found that some clients even stocked up to buy before the price discount expired. So from day one we also increased our revenue with the additional sales.
This simple technique improved our bottom line and that of many corporate clients, even the big ones. Try it! Raise prices and start making more money by tomorrow.
Sick of shelling out money for unrecouped costs? In later posts I'll explain how to deal with merchant card fees and other surcharges. I'll show you how to eliminate these cash drains and turn them into profit centers. Stay tuned! Until then,
profitable business All!
the Business Doctor