Every business has to review its pricing strategy periodically, depending on a number of factors. These include budget changes, new features, or rising costs of production. However, the key criteria one has to bear in mind are the timing at which the price change is made, and the anticipation of competitors’ next moves.
Here is how to go about introducing an increase in the pricing of your product or service:
1. Choose the right time: When you introduce a reduction in the product pricing, it is best to choose a time when it will see the maximum effect on your target audience. Similarly if you are looking to raise prices, choose the lean period in the business cycle when you’re least likely to encounter resistance. This will depend on the seasons, your stage of growth and sales cycles.
2. Provide additional value: Charging a higher price for your product will be beneficial if combined with adding value as well. For instance, if your product can benefit from some additional features or a bundle that will add more value for the consumer. Positioning it as a premium version of your product will make it more likely to get better results as well.
3. Introduce new volume points: Another way to increase your margin is to offer various different volume points for your product. For example, if you usually offer a six-month package as well as an annual package you could maintain price by making the options as a quarterly plan instead of a semi-annual plan.
4. Keep offering more services: Merely increasing the price of your product would not help. However, if you also add more services or customer support options (say, a 24-hour turnaround time instead of a 48-hour turnaround time on queries) it will be of more value to your target audience and they will be more likely to not be too affected by the price hike.
5. Be transparent about the price change: When taking the final decision to change prices, especially if you are increasing them, it is always wise to release a statement about this to make your customers aware – this way it will not be an unexpected move for them. In addition, it gives you a chance to explain why this decision was taken. Doing this adds to your goodwill and brand image.
Increasing the pricing for your products is a process that should be handled carefully and be carried out at the right time and for the right reasons, in order to minimize resistance from your target audience. Being candid about the decision will also help position your brand as fair, honest and transparent.