Price Increases Make Marketing More Challenging

Last Updated (Wednesday, 31 December 1969 15:59) Written by Michael Fleischner Monday, 04 May 2009 18:20

If you have ever worked for a company for more than one year, then you have no doubt experienced price increases. This is one of the fastest ways for companies to earn a few extra dollars and quite frankly one of the easiest.

If you have ever worked for a company for more than one year, then you have no doubt experienced price increases. This is one of the fastest ways for companies to earn a few extra dollars and quite frankly one of the easiest.

Price increases can negatively impact the sales and marketing efforts for today's busy marketing professional. A price increase on products or services that haven't changed creates a difficult scenario for current customers familiar with a lower cost. This is especially true when we hear objections from our customers expressing their dissatisfaction. With few or literally no changes to a given product overcoming objections is difficult.

One of the biggest concerns that marketers have about price increases is that of customer attrition. This is especially true in markets where your competitor is priced are lower or about the same as your offering. There is always someone else that your customer can buy from. A recent study I read indicated that even though price can be an obstacle to buying, current customers are less likely to leave you after a price increase.

There are a number of factors that explain why this is the case. Also, one must consider the cost to the customer to start from scratch. This has both and emotional as well as financial component.

Consumers have been conditioned to ask for a discount or find the sales rack. When introducing a price increase to your customers they are going to want to avoid it at all costs. This is just human nature. But this also explains why they will continue to ask for discounts long after their customers even though they wont leave you.

Here are some ways to overcome objections related to price increases:

Articulate value that is greater than or equal to that of your actual price increase. No one wants to pay more money for the same old thing. It is very difficult to justify given the current state of the economy and the growth of a competitive landscape.

Focus on switching costs. If a customer has to leave you, there are direct and indirect costs associated with doing so. Make a list for yourself. By moving to a new vendor, does you customer have to pay a new fee of some sort? Will they lose money by canceling with you or your services? How much time and effort do they need to put into finding a new vendor?

Not all customers are equal. I know that saying so is not going to be popular but its the truth. Your customers are different shapes and sizes and mean different things to your company and organization. Price increases should reflect the individuality of your customer base and be designed for maximum impact.

The final bit of advice I can give around price increases is that you should really understand your competition and what types of alternatives are available to your customer.

For companies that can provide good products at a fair price, switching is not a major concern. However if you are over priced or your product is not equivalent to something a competitor offers, then your job becomes more difficult. Marketing professionals may need to encourage their business to invest dollars in product enhancement in order to justify the price increase. Regardless, focus your messaging on value which can help lesson the blow of higher prices.