Lately business pages have been filled with episodes of consumer outrage over price increases:
- Sony came under fire for raising prices on Houston’s music in the UK
- Verizon Wireless canceled a planned $2 “convenience fee” for online and phone bill payments after a backlash from consumers
- A consumer backlash led to Bank of America Corp. canceling a $5-per-month fee for debit card users
- Netflix raised its rates by 60 percent for customers who subscribe to its DVD and streaming video services. Customers were outraged
Times have changed and so must your tactics. As a result of an increased price sensitivity and proclivity to vent via social media, it is now essential to develop and execute a well-orchestrated strategy to successfully increase prices. Following the tips below will help ensure that your price hike doesn’t result in drama and unwelcome media frenzy:
Gain consumer acceptance
No one likes to pay more, so explain why you’re raising prices. Gain consumer acceptance with justifying reasons such as:
- Costs have increased
- We haven’t taken an increase in several years
- We kept prices low to help customers weather the recession
No one likes being cornered with a “take it or leave it” ultimatum. A price increase is more palatable if there is an option to save money. Even if you don’t expect anyone to take the cheaper option, offer it anyway. Consumers appreciate choices and use the lower price as an anchor reference to base buying decisions from: “for only 10% more, I get all of these additional benefits.”
Keep your word
Only apply price increase to new purchases and renewals, and grandfather existing deals under the old policy.
Make it a point to reinforce that even with the price increase, your product or service is still a great deal.
Everyone else is doing it
Pointing out that rivals also are raising prices makes your actions seem fairer to consumers, especially if your price increase is lower than the references that you highlight.
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Think twice before increasing prices – Don’t risk a social media attack — http://www.torbenrick.eu/t/r/oqr
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