The 1% effect
The 1% effect
Price changes are often unavoidable. As your business grows, you’ll likely be spending more on overheads, such as new staff or new technology. These things provide your customers with a better service, but it can still be hard to be confident when you need to tell your customers that you’re increasing your prices. Even if it is only by 1%.
So how can you do this?
It’s all about understanding, identifying, and justifying the tangible and intangible benefits the customer may receive from a price increase. If, for example, you’ve added a new feature to a product, that’s a tangible benefit and a customer would likely expect to see a price increase.
You should ‘turn features into benefits’. Instead of simply saying, ‘we can do this’, turn it into ‘we can do this which means you will get this’. This immediately makes it about the customer and helps them see what they will receive as a return on their investment.
There is an undeniable benefit that a simple 1% price increase can make to your business. It may not seem like much, but increasing your prices by 1% can have a minimal impact on your customers, but maximum impact on your business.
For example, would you stop reading your favourite magazine if the price went up by approximately 1% from £3.80 to £3.84? Probably not. So why would your customers not pay an extra 1% for an improved service or product?
Chew on this:
Do you think you are pricing your services correctly? Is it time for a change?