In the last post, I shared why your prices were probably too low and how you're leaving money on the table. If you've ever worked at a business when it raised its prices, you probably endured grumbles from customers. Justifying the increase becomes so exhausting that many merchants take the path of least resistance and swallow the increased expenses. But what if you could raise prices and avoid the grumbles?One way to increase prices without risking upsetting or losing clients I call the Grandfather Discount. It works like this:
- Raise prices immediately.
- Tell the customers you want to keep that you're grandfathering them under the old rate for six months.
- Discount the new price back to the old.
Here's why this works:
- When your client receives the bill, your new price will stare at them from the top line with the discounted price displaying at the bottom. Your customers won't be angry about the increase because you aren't asking them to pay it yet. Those who do complain will be polite and you can receive it as feedback.
- Each repurchase during this time your bill subtly reminds them of the imminent price change. The grandfather gives them time to get used to the new price. And they'll subconsciously revise the value they are receiving upward to reflect this higher price.
- After six months, eliminate the discount as agreed. By removing a discount instead of adding an increase, the customer feels (and you can remind them) the benefit they received for six months. This is in contrast to feeling penalized going forward.
- Because you raise prices immediately all new customers will pay your new price. This adds extra profit to every new sale starting immediately.
This simple re-framing technique improved the bottom line of many corporate clients, even some big ones. Try it! Do you think this will work for your business?
Are you tired of shelling out money for unreimbursed costs? In a future post I'll explain how to deal with merchant card fees and other surcharges. I'll show you how to eliminate these cash drains and turn them into profit centers. Stay tuned! Until then,
profitable business All!