If you have ever worked for a company for more than one year, then you have no doubt experienced price increases. This is one of the fastest ways for companies to earn a few extra dollars and quite frankly one of the easiest. As marketers, when we have to market and sell the same items at a new, higher price, we may find that the tradition campaigns become less effective. This is especially true when we hear objections from our customers. If there have been little or no changes to a given product, then it is next to impossible to overcome objections related to price.

One of the biggest concerns that marketers have about price increases is that of customer attrition. This is especially true in markets where your competitor is priced are lower or about the same as your offering. There is always someone else that your customer can buy from. A recent study I read indicated that even though price can be an obstacle to buying, current customers are less likely to leave you after a price increase.

Many factors determine whether or not a customer is going to start buying from a competitor. In any given market than can be thousands of competitors and in others only 2. But keep in mind that switching has emotional and financial costs.

Your customers, and all consumers for that matter, have been conditioned to find the lowest price possible for any given product or service. When rolling out a price increase, customers do not want to pay full price. This is why they continue to ask for discounts even after a price increase has been put into affect.

Price increase can be modest or substantial. Depending on the scope of your price increase, customers may react in a very different manner. Below I have listed a few things to think about before rolling out your price list. Keep in mind that you may want to segment your messaging to have maximum impact.

Add value that is greater than or equal to your price increase. Customers do not want to pay more for the same old thing. When they do, their perception of value diminishes. Provide additional services, support, or terms to deliver additional value that is substantiated by price.

Focus on switching costs. If a customer has to leave you, there are direct and indirect costs associated with doing so. Make a list for yourself. By moving to a new vendor, does you customer have to pay a new fee of some sort? Will they lose money by canceling with you or your services? How much time and effort do they need to put into finding a new vendor?

Not all customers are equal. I know that saying so is not going to be popular but its the truth. Your customers are different shapes and sizes and mean different things to your company and organization. Price increases should reflect the individuality of your customer base and be designed for maximum impact.

One thing to keep in mind is that you should really understand who your customers may consider purchasing from if you weren't providing them products or services. Then, be sure to understand what their pricing structures look like. For companies that can provide good products at a fair price, switching is not a major concern. However if you are over priced or your product is not equivalent to something a competitor offers, then your job becomes more difficult. Marketing professionals may need to encourage their business to invest dollars in product enhancement in order to justify the price increase.

Regardless, focus your messaging on value which can help lesson the blow of higher prices.

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Article Submitted By: Michael Fleischner
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