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You Can Increase Prices Without Losing Customers

 

 

You Can Increase Prices Without Losing Customers in Order to Stay in The Black!

 

Merchants are often lured into raising the prices of goods, but the fear of losing customers often makes them drag their feet. However, there are times when you must increase prices to keep up with the cost of production and supplies and sustain profit margins. If you raise prices without conducting adequate research and adopting an appropriate pricing strategy, then you run the risk of losing customers and a reduction in sales. Fortunately, if you use effective pricing strategies, you can increase prices without losing customers and raise profits as well.

 

Research – Do you Have to Raise Prices?

Research is the most important part in formulating your pricing strategy. It will guide you on whether to raise prices and by how much, and what impact it will have on your customers. To begin with, research about your costs, that is, the price of materials, packaging, shipping, and production. This will help you gauge any rise in the price of production processes and thus save you from a loss in profits.

Raising the price of best sellers will work well for boosting your profit margins. Keep tabs on your sales and profits to determine when it is safe to raise prices.

 

Raise Prices and Inform Your Customers, Immediately!

No customer is ever happy to pay extra for an increase in the price of any goods(or services). But if you act with transparency, telling your customers why you had to raise the price, you could be playing it safe. This strategy works best in times of a price rise as a result of uncontrollable rising costs. Announcing the price rise and being honest with your customers by citing the reasons in your website or blog, social networking forum, or anywhere on the web where you engage with customers will be a step in the right direction. Your customers will have no reason to believe that you are increasing prices merely for profit.

 

Raise Prices Gradually

A gradual rise in prices at regular intervals would give a lesser shock to customers than a sudden increase that might come as a big blow to them. However, this option might not work well for your pricing strategy, especially when you want to retain customers, since it will be harder to explain the gradual price rise to them.

 

Increase Higher Value Goods

You can get away with a rise in prices by increasing the perceived value of goods. This means raising the price of a product that is already valued highly. For example, you specialize in jeans. In order to increase prices without losing customers, it will help to introduce a new line of jeans that costs the same in terms of production cost as your other products. What divides this new line of jeans from your regular product line is the appearance. This is where you can add a superficial charge and increase price. Introducing a limited edition section can prove to be a great idea as everyone perceives Limited edition to be expensive!

 

Include Value Added Services

While introducing a price increase for a product, it can help to include a value added service. By doing so, you will be creating an impression on customers that the price rise is due to the value added service. You can charge extra for premium services, such as extended warranty, personalized service, or gift wrapping, to increase profit margin.

 

Include Premium Price Options

When your primary focus is to increase prices without losing customers, you can add different price options on all products. For example, a product may cost higher in a special color or feature. This gives you the advantage to sell the same product at a higher price range. Customers willing to buy the product with an added feature or special color will be willing to pay a higher price. Not only this, by doing so, you can benefit from anchor pricing, wherein customers anchor their expectations for price on the price before them.

 

Offer Multi-Product Packages

Put together product bundles(package deals) if you sell related products to add value to customers. Bundling products often results in a larger sale than what you would get from selling an individual product. Add it to the bottom of your product page as an upsell option or include it as a regular product.

Related: Increase Revenue and Improve Customer Experience With Upselling and Cross-Selling

 

Bottom Line

Explore all these options well before going ahead with raising prices. It is tough to predict customer reaction to price increases. Keep a close watch on sales figures after price increases and you should be in the Black!

 

 

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