Do you need to make changes to your products’ prices, in order to adjust your small business’s bottom line? Many entrepreneurs are hesitant to do this because they are afraid of alienating their current customers. The success of your pricing policy depends on how the policy is implemented. Part of this means timing the pricing change carefully, and predicting your competitors’ reactions to the pricing change.
How much do you alter the price of your products?
Some people tend to implement one large price hike to get it over with once and for all. But you will likely have more success in keeping your customers if you gradually increase prices over time as you gain your customers’ loyalty. A few small hikes over a period of time might even go unnoticed, as opposed to a single large price hike which could cause customers to steer away. If your small business offers multiple products, perhaps only alter the prices of some of them, while leaving the rest unchanged.
What time is the right time for a price change?
Analyze your small business’s growth and sales cycles to decide when to make the price change. For example, some businesses raise prices during the holidays, while others change prices when new products are released. It all depends on the seasonality of your product, and what time would be more appropriate for your business’s sales cycle.
Remember that quality is just as important as price.
Improving the quality of your product can have the same effect on your bottom line as hiking up the price of your product, but this change will likely be perceived quite differently than a price change. Moreover, you can change the value of your product as well. For example, if you sell boxes of candy, consider making the boxes a little smaller or including a little less candy while keeping prices untouched. Increasing value can be just as effective as increasing product prices.