Price is a sensitive topic.
It requires you to ask for money.
Closing the sale, asking a boss for a raise, a friend to pay you back. All require the act of asking for money. Uncomfortable.
The conversation comes often, so it is better to be comfortable with it. Asking for money is not dissimilar to raising prices. You are asking customers to pay more.
When Companies Raise Prices
I enjoy desserts. A lot. My new found love is Mövenpick ice cream. It is creamy, soft, and delicious. But I’ve noticed, as with most products over time, the fill levels are down. This means one thing. They have raised prices. They did not tell me they raised prices, but did it in such a way that hopefully I wouldn’t notice.
In college I had the privilege of working in fast food. During my time at this company, they adjusted their prices. The price on the menu didn’t change though, it was done through an elaborate campaign of making cups smaller.
The smaller cups were visibly the same size, and one would not know the difference, unless you took a close look. This was so extensive that the way products were made was adjusted. I understand the reason; it was to cut costs, but we did not tell customers.
Netflix is raising prices. They have done so, most likely, as the result of movie studios requiring more money. Their costs have gone up. They have also cracked down on the use of VPN’s, which comes at a time when I have one episode of Mad Men left; the last one. Please do not spoil it.
How To Raise Prices
The difference between Netflix and the other two examples is that Netflix has said they will be raising prices. They might lose a few customers, but at least everybody knows.
The result of these events is that prices go up. Inflation goes up. This is natural and I have nothing against it. It allows businesses to grow, bonuses to be awarded, and stock prices to increase.
In an altruistic sense, the increase in prices could allow for the companies to provide better salaries to their employees. Or allow companies to just continue to provide jobs to those they employ.
What I am against is raising prices in the form of a lesser product, and not being willing to have the conversation with customers. Hiding behind deception, hoping customers will not notice they are receiving less.
Considerations When Raising Prices
In your own business, if you have control over your pricing, do you have the “I need to raise my prices” conversation?
If you are afraid your customers will be upset that prices are going up, maybe you did not provide enough value?
If you have provided enough, your customers will gladly pay more. They will not be able to live without your service.
Trust is a large factor in getting customers to do business with us. If we raise prices by lowering quantity or decreasing quality without telling customers, we may have destroyed the trust we invested time in building.
Is the small increase in revenue worth it?
Good luck and good selling!