As we grapple with rising wages, increasing energy costs and tough trading conditions in the new year a lot of businesses will be looking at ways to increase or even just maintain product margins. Inevitably for most, this means increasing prices.
As we all know price increases are very rarely well received, even by those that know costs are on the rise. Therefore it’s very important to take a tactical approach to announcing any price changes because, in case you weren’t aware, there are good ways to deliver bad news to customers.
Here are 3 of the best tactics to avoid sending your regulars reeling when product prices are on the rise.
Give you customers forewarning about the coming increase. This gives customers a chance to purchase more now before new prices come into effect. They feel like they’re getting a deal this way. Once the new price comes in they will have prepared themselves for it and there’ll be minimal resistance to the idea.
2.Favour Your Favourites
Just like Qantas and Woolies, offer discounts to frequent customers and a ‘normal’ price to occasional patrons. This way you cover the price hike without hitting the hip of your core customers. But no need to roll out rewards cards, you know who your key customers are.
3.Improve Your Offer
Look at where you can bundle products, redesign packaging or add service features to improve the value proposition. If you can create the perception that a product has been improved, whether it has or not, customers won’t mind paying more for it.
These are 3 simple but important tactics for an agreeable price increase in any operation. So if you’re looking at improving profitability via prices get out there and give warning, favour your favourites and improve your offer. It will make the process as painless as it can be.