Pricing Your Products

The decision to hike or lower the prices on your products or services can be difficult and have a direct impact on your business. However the way you go about making these changes in price will determine the results of your new policy. For instance, two companies who change the prices on the same product by the same amount, may get varied outcomes depending on how they went about implementing the change.

You need to pay attention to the timing on your new policy. You need to know if your customers think you are giving them value for their money and you need to gauge the reaction of your competitors in advance.

One way of raising your prices is to implement one single large hike. This may be due to an increase in raw material costs or because you want to bring down the demand to a more manageable level.

In reality, however, most companies implement price hikes on a gradual basis. They feel their customers will accept the price rise better since they will not be hit by it in one shot. Sometimes customers may not even notice the price hikes if they are spread out over a long duration of time.

If your company produces a range of products or services, try increasing the prices on some of them and leave the others as before. It is also wise to assess the kind of product you have since some products are more sensitive to price hikes.

You should select the right time to introduce your new pricing policy. To lower prices, the timing should be such that you gain maximum mileage out of it. To increase pricing, select a time when you are likely to face the least amount of resistance. Your timing will also be decided by seasonal changes and sales cycles. For example, some retail stores increase the prices on their goods around the time Christmas is approaching since shoppers are in a hurry to buy and pay less attention to how much they are paying. A store that has recently been launched may keep prices down in order to attract clientele.

You can also modify the value of your goods while leaving the prices intact. For example, you may reduce the quantity of a product a bit but maintain the same price level as before. Most customers will not notice the change as long as it is not very substantial. The net effect of this policy would be the same as raising the price.