What happens to your product or service when your costs are going up and your profits are going down?
It’s obvious that you can’t sustain the losses for long and your prices will have to rise.
But how to do it without driving away customers?
Writing in The Wall Street Journal, marketing experts say some customers are more sensitive to prices than others. A good rule of thumb is to offer discounts and coupons to those customers. You could also consider offering different, lower-priced versions of their printing project in order to save them money.
The discounts work because price-sensitive people still buy the product, though at a lower price, and those who aren’t so sensitive about pricing buy the product anyway. It averages out to be more income overall.
Kusum Ailawadi of the Tuck School of Business at Dartmouth, writes that it is a mistake to think customers don’t pay attention to prices. They put a lot of emphasis on special deals like coupons or sales. It’s one reason why raising the price and offering deals is a much smarter move than eliminating coupons and offers in order to save the store’s money, Ailawadi writes.
There is also a psychological component to promotions. People who make the effort to take advantage of offers feel like smart buyers and smart buyers are happy buyers.
Also consider which prices in your service need to increase.
Printers often institute a percentage increase across the board. Consider studying all of your costs and labor. If paper has gone up significantly, but your labor costs are not as dramatic, then just raise your paper prices.
Knowing all of your costs and areas of profitability is key when raising prices. Are you thinking about raising prices? Have you raised them recently? How has the experience gone for you?