In the Trenches: Making a Pricing Change the Right Way

BrettSnyder by Brett Snyder on April 13, 2011
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This week, we’re beginning one of the most difficult things that a small business can do: putting a pricing change into place. There are few things that can have such a big impact on the customer as a shift in rates, and that’s why it can’t be taken lightly.

The first question I had to ask myself was… why? Was there a need for a change? For us, the answer was most definitely yes. Our pricing was set up on a per-trip basis, and that has led to some problems in matching the rate paid to the amount of work we had to do.

For example, one “trip” could be a simple round trip or it could be a multi-city itinerary with five destinations. At the time, the simplicity of going with a flat per-trip rate made sense. But now it’s proving to just be too much work for too little money.

To fix this, we’re going with directional pricing. If you just need help going one way, you can pay less. But the price goes up with the number of destinations you add. For some people, this means the price to handle a trip can actually go down. For others, it will be going up. Not everyone will love this change, but it’s something we need to do for the business to succeed.

The change isn’t happening this week. Rather, we’re just beginning the process by including some details in our newsletter this month with the hope that we’ll get a response and some guidance from the people who know us best. We’re going to be soliciting feedback directly from our best customers to make sure that we aren’t making a grave mistake with horrible consequences. Once that’s squared away, then it will be time to start the implementation.

Raising prices is always a tricky thing. Getting the lines of communication open early and not making the change until we feel very comfortable with how things are progressing is key. There’s no hurry here. It just needs to be done right without alienating our best customers.

BrettSnyder

Brett Snyder is President and Chief Airline Dork of Cranky Concierge air travel assistance. Snyder previously worked for several airlines, including America West and United, before leaving to create a travel search site for PriceGrabber.com. Snyder did his undergrad at George Washington and earned his MBA from Stanford.

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