“Quality comes with a Price. So now you know how to increase your price”. – malenadugroup
Customers require deft and skilful handling – anything could be a trigger to irritate or annoy them. Among the things that could possibly escalate quickly is the company’s decision to affect an increase in prices – this decision is never an easy one and could result in several complications including customer annoyance. The cost of everything has gone up significantly and this leads to a decision on the part of the company to increase prices. Making the decision may not be that difficult, but implementing the increase in prices without annoying customers is the hard part. The reaction of customers to an increase in prices would depend largely on the management of its implementation. Given that, companies find this hard to do they could hold back their decision to increase prices, for fear of annoying customers and sending them straight to competition. This is a very real fear, but smart companies would find ways to counter the risks of increased prices.
An increase in prices involves meticulous planning and impeccable timing. An increase in prices would be successful but a company must know how it would affect the customer’s perception of the value they attach to the company’s offerings. In addition, they must know when the price hike would have the least impact – that is it will not annoy customers or force them to seek a business relationship elsewhere. A company must also have a good understanding of its competitors such that they would be able to predict their counter reactions, which could adversely affect the company’s decision to increase prices.
An increase in prices cannot be an arbitrary decision and a company must think carefully about how much they would want to increase prices before actually implementing the change. Some decide to almost double their rates so that they do not need to make incremental changes and customers would need to adjust to only one major hike ‘pain’. An increase in prices usually happens when there is an increase in the prices of commodities and key components of a company’s products / offerings. Simply put, the right time for an increase in prices is when a company’s goods are in high demand. Of course, intimating customers about a prospective price hike could help ease the burden on the company and affect the hike without annoying or alienating customers.
Some companies prefer to make smaller increase in prices as their customers could become highly annoyed by a large hike. Gradual increase in prices could be affected in stages such that with time, customers get accustomed to them and there would be no risk of annoying them given their long association with the company. Companies that offer more than one product, could affect an increase in prices for some of their products, while either keeping the same prices on others or even lowering the prices on them. Whatever decision companies make with regard to their prices, an understanding of their customer base, target audience, market environment and their competitors would be quintessential to their success. It would be vital to know, for example, which customers are price sensitive and for what would they be willing to pay more. The festival / holiday season is usually when companies affect an increase in prices since customers are rushed and in the mood for buying and hence do not pay attention to a hike.
An increase in prices would be better supported and would go unnoticed if customers perceive and attach value to the product or service for which the hike is affected. It would be the responsibility of the company to ensure that customers receive high value from their offerings, complemented by top class customer service. The chances of not annoying customers by an increase in prices would be higher if there is enhanced value for them. Customers love to gain more value from their association with a company but are not always happy when the same company decides an increase in prices. Therefore, to maintain the balance, a company must first increase value for customers such that the hiked prices would not pose a problem.
To lower the possibility of annoying customers by an increase in prices, a company could put in something ‘additional’. A free something offer, would not cost the company much but would have a high, perceived value for the customer. Such ‘extras’ please the customer enough to ignore a hiked price and also to buy more. When certain companies cannot affect an increase in prices, they either reduce or change the packaging or reduce the actual size of a product. This is most prevalent in eateries and restaurants – by reducing the portion size just a bit, they can maintain the same costs and most often customers do not notice. However, if customers tend to notice reductions, it would be better to affect the increase in prices, as long as the quality of the products / services remains high.
To avert the risk of annoying customers, many companies do not affect an increase in prices, but add a ‘special’ fee to their offerings. This fee is usually a ‘convenience’ fee or some such fee that customers usually do not mind especially if the product they buy is in high demand or its prices have soared in the market. When things stabilize, companies can remove this fee, bringing down the amount a customer would have been paying – lowered prices make everyone happy.
In their feedback, customers often suggest changes or improvements to the company’s products. By incorporating the customer’s feedback, a company could make the improvements / additions and this would be a great time to affect an increase in prices. Customers would be happy to note that their suggestions were valued and would not mind a hike since the product / service would be closer to what they want.
As mentioned, all customers love offers, incentives, and discounts. When your company does affect an increase in prices, it would be great to offer discounted rates occasionally to maintain a balance. Some customers might avail of these offers while others might ignore them but would continue to buy the products at the increased price, making it a bargain for both sides. Clubbing together a number of products or services at lowered costs, also lends a heightened perception of value. It would be beneficial to a company since it would be selling more of its products, which would even out the lowered costs.
Annoying customers by an increase in prices is a real danger as mentioned. However, if there is no option for a company, but to hike prices, they could look at targeting a completely new set of customers. This would be a great time to expand the business and customer base, while affecting an increase in prices. This would cut the losses the company could incur if some customers left due to the hike.
Like any other business decision, the one taken for an increase in prices requires meticulous planning. Ensure that the hike is enough to cover costs for a few years without running the risk of annoying customers. There would always be some unhappy customers despite best efforts and your company could see an increase in complaints. Your company must remain prepared to explain the practicalities involved in the decision to increase the prices and make every effort to put customers at ease. However and whenever your company does decide to make changes – especially one like an increase in prices – ensure that you keep the customer’s needs and expectations in mind. Careful attention and thoughtfulness can make even an increase in prices hassle-free for customers and result in higher revenue and profit for your company.