Yesterday, the tactic discussed was surveying your competition. One of the aims of this is to allow you to define your pricing strategy more precisely, and avoiding being average.
Today’s post is related to this: when was the last time you increased your prices? If it was more than six months ago, then you should think about putting them up, regardless of what your competition are doing.
Increasing your prices immediately increases your profit margin and your bottom line. And while it’s a simple change to make in your business, it’s often hard to do.
Psychologically you may resist putting your prices up because you’re scared of losing customers or because you don’t want to “feel like you are ripping them off” – something I hear a lot of business owners say.
In reality, most people won’t notice you’ve put your prices up. And your business may be better off without those that do anyway (more on that in a later post).
Secondly, why would your customers feel ripped off if you’re providing great value and customer service? Value is not the same as price, so concentrate on giving your customers great value and service and price will become less of an issue.
If you believe you give a better service than your competition, or you can’t keep up with demand, or just that you are undervaluing your service then it’s time to review your pricing. Perhaps increase your prices by a few percent to start with. Focus on items that are not price sensitive – this is often luxuries or peripherals and add-ons to main purchases. Then monitor your sales. Did your sales volumes go down? If not, the value you are offering still exceeds the price, so you can increase even further. When your sales volume starts to dip, you can drop your prices back a notch.