The decision to raise or lower prices is a difficult one and greatly affects your business. But the more important thing is how to achieve this price change. In other words, two companies that change prices for the same products may get different results, depending on how they implement the new pricing policies.
Raising and lowering prices requires giving careful attention to timing. As well as knowing how to influence your customers’ perception of the inherent value of what you are selling, and it forces you to study and accurately predict the reactions of your competitors.
Determine the Size of the Change in Prices
Sometimes, companies may raise their prices too much, or even double their previous rates. Firms may announce a significant price raise when they notice significant increase in the price of a major component of their products. This may alienate many customers who are unable to pay the extra. So, most price increases take place based on the theory that customers will get used to the rising prices over time, and they will be willing to bear the new prices as they become more loyal to the store. Clients may not notice a series of small increases.
If you have more than one product, consider raising the prices of some products while leaving others’ the same. Or even lowering them. Auto dealers use this trick to their advantage by lowering the price of cars and trying to make profits from accessories, which customers may accept their prices whatever they were.
Choose the Right Time
If you do decide to raise prices, choose when you will encounter the least resistance. The seasonality of your business and the sales cycle influence your selection. Lots of retailers raise prices seasonally. And it is usually in autumn when Christmas approaches. This pushes shoppers to buy what they want regardless of price. Also, new stores that are still in the process of growth may delay raising prices, in an attempt to reserve a place in the market and get new customers.
Only Change the Value
Many firms change the value without changing the price. For example, a company might keep the price of a product constant while reducing its size or weight.