Raising your prices is one of the easiest ways of increasing your profits, it is also a strategy that causes much perturbation for business owners. But this week I have a real life story to share with you.
Six months ago I had a session with a new client around pricing as they had admitted they had no formal structure in place. The outcome was that they were making little profit at all from several clients and for one in particular (based in China) they were actually losing money. Clearly not a winning strategy so we implemented a new and fairly straight forward pricing procedure and with immediate effect their prices went up.
Much deliberation ensued, will their clients laugh, fall off their chair or choke on their biscuits? Well no, actually only one client threw their toys out of their pram – the company in China.
BUT, last week the client had some news, the Chinese company had come back to them and placed their regular order! Where this gets really interesting is that my client had increased their price by 148% and they still came back.
Yes, I DO realise this isn’t necessarily representative of every business out there and many sectors are price sensitive but it is a fantastic reminder that we must sell on value and not price, this company had obviously spent a few months shopping around but ultimately felt they were still getting great value even after a substantial price increase. Fantastic!
…..and whilst I’m allergic to discounting remember it is infinitely easier to start high and come down rather than start low and go up!