How To Increase The Price Of Your Product
Let’s Talk Price
So you’ve created an awesome product and people just can’t seem to get enough of it. As time goes by, you hire more staff, possibly move and increase the size of the workspace. One thing seems to stay the same: the price. However, the price of everything around you seems to be going up, so how can you bring up the issue of price to your customers without fear that they will stop using your product?
First of all, you need to change your own mindset before you can present it to your customers. If you don’t believe in the price change, why should your customers accept it? How long has your company been around? More likely than not, the product you were first offering when you started is different to what you’re currently making available. You need to believe that your product is worth the price you are asking for. Think about why your customers are using the product now. There must be a reason that they are using your product compared to anything else in the market. So you can rest easy knowing that you must be doing something right for them to come to you in the first place.
Why Do It?
Let’s think of why you are increasing the price of the product in the first place. Are the staff asking for an increase in wages? Is rent going up? There are a million possibilities, but you have to understand why, aside from just wanting to increase the bottom line. Of course, as with any business, your goal is to make as much money out of the product you are selling, but, to increase the price without any planning or fully understanding why is a recipe for disaster.
Consider this: you bought a coffee from the same coffee shop every day for a dollar. After a year, they do a price bump to $1.25. That’s not too bad you think and you chalk it up to inflation and employee pay. However, the month after, the coffee shop bumps the exact same coffee up to $5.00! Would you still buy that coffee the next day? It is very likely you would not continue to visit that coffee shop unless that coffee was significantly better than anything on the market. This is what value proposition is. Unless you can prove to the customer that they are getting value for what they pay for, it becomes improbable that they are going to continue with your services.
So where is this value? If your product has been constantly tweaked to work better, each iteration had money and time put into developing it. Did you add new features that weren’t originally there? Even if your product hasn’t changed drastically, chances are, you brought on new team members to better service your customers. Should you really have a product that works well for the client, the fact that the product integrates so well for their business, means that a small price bump (from the example above, this is the $1.25, not the $5.00) is still worth the cost for the customer. One thing you may have noticed if you looked at the list carefully, is that there is no mention of anything to do with costs that are irrelevant to the customer (e.g. advertising costs, new office equipment). The focus remains on what the customer is getting.
What are some techniques that your business has done to bring the message of a price increase positively to your clients? Share with us in the comments below!