Q: I'm worried that I'm under-pricing
myself out of business. How do I raise prices without alienating customers?
A: While it’s only natural to worry
that higher prices will drive customers away, it’s important to be able to raise
your prices if you want to maintain healthy profit margins as your company
grows.
It's true that customers may initially balk at a price hike. The key is to
overcome your fear and ferret out the reasoning behind your customers' buying
decisions. While price is always an issue when making a sale, many customers
consider quality, reliability and service to be more important. That is
especially true of loyal customers who’ve worked with your company for many
years.
According to Joe Fulvio, a market development specialist at the Third Coast
Partners consulting firm in Doylestown, Pennsylvania, "Customers shop price when
they perceive little or no difference between you and your competitors or when
they perceive differences as unimportant to their buying decision. Failing to
discover the real reasons behind a customer buy decision is where most sales are
lost."
The same holds true whether you’re selling to consumers or to other
companies. The best way to differentiate your company from your competitors,
Fulvio says, is to discover your customer's "pain points"--his or her needs,
desires and motivations--and then, during the selling process, address and
satisfy the need that led the customer to you in the first place.