Prices Increase And Savvy Marketers Add Value

By Michael Fleischner, July 3, 2009 4:58 am

by Michael Fleischner

For those of us who have our own businesses or work in corporate America, the idea of a price increase isn’t new. In fact, annual price increases are one of the fastest ways for you to earn a few extra dollars to improve margins and cover growing costs.

As marketing professionals trying to sell around price increase, we more often find that traditional campaigns become less effective. All it takes is one heavily weighted variable to have a negative impact on campaign performance. This is especially true when we hear objections from our customers and are unable to fully justify the increase. With few changes to a given product the prospect of creating value is limited.

A key concern among marketing professionals is that customers will quickly move to a competitors product as soon as they hear the words price increase. This is especially true in markets where your competitor has a similarly priced product. There is always someone else that your customer can buy from. The good news however is that few customers migrate because of price increases.

There are a number of factors that explain why this is the case. Also, one must consider the cost to the customer to start from scratch. This has both and emotional as well as financial component.

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.

Here are some ways to overcome objections related to price increases:

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?

Segment your price increase. Not all customer are equal so treat them differently to make the transition smooth and get the biggest bang for your buck.The truth of the matter is that your customers are different. Some have been doing business with you for a long time. Others are working with you for the first time. Your price increase should be reflective of the individuality of your customers.

The last piece of advice I can give anyone thinking about delivering price increases is to fully understand the competition and what types of alternatives are available to those you currently serve.

If your company offers a better package at an equal or more favorable price, the notion of losing droves of customers over a single price increase really is not an issue. If your offering is less valuable however then investments may need to be made to enhance the product or simply revisit pricing.

About the Author:

Michael Fleischner is an Internet Marketing Expert with more than 14 years of marketing experience. He is an author and founder of The Marketing Blog. Read his search engine optimization book, SEO Made Simple, to enhance your internet business. Get a totally unique version of this article from our article submission service

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