Here’s How To Justify A Price Increase

A price increase is something customers feel apprehensive about. Among many other expectations, customers want fair pricing from a business. You may be surprised that enterprises feel the same way because they are unsure how an increase would impact product performance. No matter how you look at it, increasing the current cost of a product or service is a necessary evil. It takes a lot of tact to defend or justify it. Pricing experts say an increase between 5% and 10% may be expected yearly. Here are suggestions on how to go about this.

1. Point out your added value

Undoubtedly, a lot might have gone into production costs, which informs the decision to increase prices. Therefore, it makes sense to review prices upwards to break even or make profits. This is very well understood as an entrepreneur, but you cannot say the same for your customers. Naturally, they want to invest in or purchase quality items at a reduced price. Their main concern is to save as much money as possible, especially in these times.

This is why businesses usually face some resistance from the public when prices increase on the market. This makes it crucial to communicate the added value of your product. What is the improved element of your product or service? What is the differentiating factor from your competitor’s product? Did you factor in an eco-friendly component in your business’s quest to go green? These are valid questions that support the added value discussion. 

2. Maximize the opportunity presented at the product launch

Many businesses take advantage of a product launch to interact with their audience. This is mostly because it will be a great opportunity to communicate the quality of the new product. Moreover, because you have direct access to the consumer, it would be best to cut down to the chase right there and then. During the launch, consumers may want to know what factors went into the pricing. This will be the time to acknowledge and address their concerns.

Perhaps, the same product you released is cheaper at a competitor’s end, so why should they patronize yours? While assuring them that the increase is worth their money, it would be best to also quash any doubts about the product. You may want to refer to helpful tools like the product launch formula review for tips on addressing these concerns from the early stages.

3. Highlight how your business’s social responsibility influences pricing

Now more than ever, customers love to be associated with a socially-conscious business. A November 2020 Forbes report stated that a business with a vibrant social responsibility culture tends to easily win over potential customers. Another report also stated that clients are more willing to purchase at a higher price when they know about the company’s social responsibility culture.

Customers often feel they contributed their quota to your cause by investing in your product. When you justify and defend from this angle, the chances of facing marketing resistance are greatly reduced. The guiding principle here is to be truthful about your social responsibility activities. It would be considered bad business ethics to increase prices and peddle untruth about it being towards the company’s social responsibility.

Here’s How To Justify A Price Increase