How Companies Can Get Smart about Raising Prices
How Companies Can Get Smart about Raising Prices
Getting the customers to pay more for the products they have been paying for is very difficult for companies to bear. Many companies find it very difficult to convince customers to pay more for the items. Companies do not see why customers should pay more for a product they have been paying and doing well with. Customers on the other will never want to understand why they are required to and most of them will go a step further to look for other products that are even more expensive but their prices haven’t been increased or required to pay more. Coupled with the very unreliable economy, customers will never want to pay more for the same products they are offered. For this reasons most companies find it viable trading and transacting with the same price and never expecting their customers to give more (Dolan & Simon, 1996). They resort to other measures to keep their profits flowing in. On the brighter side, if things are done correctly, customers can be willing to give and pay more to get what they want to buy. Companies can get smart about raising their prices. Customers won’t go and they won’t find the expected losses as some might shy.
There are very many ways to get the consumers to pay for more. Consumers will always want value for their money and nothing much. The best way to the get the consumers pay for more is to make them first have feel of their products. This is especially when the product is new in the market. First make them understand why you are making them expensive when compared to the competition. Consumers will likely want to pay for more when the differences or “betterness” are clearly pointed out to them. For a case like this, consumers will most likely prefer your product because they know why they are choosing it. They will prefer to pay more because they already understand why they are paying for it.
The second way to make consumers pay for more is to make them feel like they would pay more for the same price elsewhere. A perfect example is where someone is offered either $ or a mug. The mug obviously goes for more price and value. The person will go for it because they believe that they will bet more money elsewhere if they got the mug. They won’t go for $5 because they know its value is constant For a case like this, make the customer know a fixed value that they won’t even have to go for the rest when they get it (Forbes, 2014).
Marketing is one other very important tool. Aggressive advertising will work well. Show the customers why your product is expensive and worth more when compared to the rest in the competition. Aggressive marketing will also make the customers who are not yet exposed to different products make them feel like it is the only product out there in the market. This has been witnessed in different occasions where the consumers paid more for a product they initially were not aware of. This is a very powerful weapon for the consumers (Dolan & Simon, 1996). The other way in which most companies can make their consumers pay more is through taking the product to places and markets where others haven’t explored well . This will expose the consumers to markets where they haven’t been explored well in the past and allow them to dictate their price.
There are several pricing strategies one can adopt to successfully increase the price of their products without affecting them negatively. The main one is being honest. Tell your customers you are genuinely increasing their prices. They will most likely understand why you are doing so. Explain the cost to the customers (Stiglitz, 2012). There is nothing more convincing than knowing and understanding the actual cost to the product you are buying. The customers will willingly pay more for it.
The other reasonable way to comfortably increase the price of something is to add more feature to it. Customers will tend to pay more for them. Giving them a watered down and lowly priced version of the product is the best way to dealing and handing it. Customers at long run will have options to choose from. The other way to do it is raisng the prices for reasons other than profitability. Explaining other reasons to the customer even though you are after profitability in the long run . Customers will pay more for it. Inform your customers in advance why you are increasing the prices. This will give the customers time to adjust and fit well into the system without having being abrupt (Stiglitz, 2012).
In conclusion, increasing prices of goods and services is something that most companies don’t want to bear with. It is a risk most of them will likely want to opt for other alternatives. Most won’t want to take this risk. However situations might force people to do so. Addressing them well is the best way to tackle it.
How To Get Customers To Pay More For Your Product. (n.d.). Forbes. Retrieved October 2, 2014, from http://www.forbes.com/sites/heidigranthalvorson/2013/05/06/how-to-get-customers-to-pay-more-for-your-product/
Dolan, R. J., & Simon, H. (1996). Power pricing: how managing price transforms the bottom line. New York: Free Press.
Stiglitz, J. E. (2012). The price of inequality: how today’s divided society endangers our future. New York: W.W. Norton & Co..