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Most businesses are afraid of raising prices for the simple reason of not losing their share of the market. You don’t need all the customers in the market for your business to grow and yield profits. The goal of writing on how to raise price and still win the market is to annul that fear. You really wish to increase price? You will need to know how to gain a competitive advantage and then read through these 6 essential points on how to increase price and still win the market.
1. Build a brand:
branding is beyond the message your logo communicates, it goes into what perception customers have about your business. Consider apple and their brand story,they have so much developed their brand that they can sell on high prices and still win the market.
Related:How apple built their brand.
No matter how they did that, the principles are the same and can be adopted by any business but applied in a unique way. You must understand that branding is selling a promise to your users then, consistently and unfailingly living up-to it. When people get to trust your brand, they will be willing to pay your price.
2. Add incentives:
For each time indomie noddles (using Nigeria market as a case study) increases their price? They attach a promo to the products which might last less than 4months. Either adding an ordinary exercise book to a carton of the noodles or asking people to gather 20 animated stickers attached to the inside sachet of the noodles pack and qualify for an “X” amount of riffle draw. This shifts people’s attention from price increase to becoming a lucky winner or on the benefits as the case may be.
The secret of human nature is adaptability. They prey on that and once people adapt, the promo ends. Most times, the end date is fixed ahead with enough time to allow the natural human adaptability nature to play it’s part.
3. Increase Value:
Either permanent value(which is better) or as a promo. Increase in value can be the jingle of buy 2get one free. Purchase an interior furniture from us and pay nothing for installations. Or increased quantity or quality as the case maybe.
However, most companies might choose to repackage their products. Coca cola changes their bottles periodically and sometimes it leads to increase in prices. People want to understand why price must be increased so, giving them reason through value addition (product repackaging isn’t always enough) is a very viable explanation.
4. Emphasis matters:
Emphasize on your product differentiation. I am not sure which company first produced a water resistant phone. However, apple’s launch of iPhone 7, the water resistant feature among others was an emphasis and thus an increased price.
Let people come to terms with your product uniqueness. For indomie noodles they sold the tag line “the difference is in the taste”, “noodles like no other” and they truly lived up to it. Whether an increase in quantity, quality, a rebrand, or value addition, just emphasize it strong enough through ads and truly live up to it. If you don’t live up to your market promise, advertising will become the fastest route to the death of your business.
5. Test the market:
You can choose to increase the price in bits while repeating the cycle till you get to your desired price level while considering the kind of product or services you have and the kind of market you’re in considering the economics of market. If you are enjoying market monopoly or perfect market where the forces of demand and supply controls the market.
Some products are price sensitive. Little change in price affects demand. Products built around basic human needs can enjoy price increase applying these strategies because people really need them. Internet connection is becoming a basic need too thus, the increase in price of data sold by telecommunications companies. This is why you need to test your market to understand how the price of your product relates to its demand.
6. Increase the price:
All conditions taken into consideration with positive outcomes then increase your price while repeating the cycle with a combination of these strategies.
AN EXCEPTION TO THE RULE: If your target market is low income earners, increase in price will greatly affect your market. Maybe you’ll end up losing the low income customers and if you develop your product to meet the standard of high income earners, you’ll simply have a market shift from low income earners to high income earners.
Let us know about your view on the comment box and don’t forget to tell us about the result as you apply them. We will be glad to hear from you.