Price Increase

How to handle a price increase

[Bruiseviolet]

We have made a decision to increase our prices in August. We have given it many months of thought and gone over the numbers. Like I have said before, we have a very niche product line, and we have exclusive rights to a handful of our products- so they cannot be purchased anywhere else in the world. At first we priced them to be competitive with similar items from competitors.

However with different FDA regulations etc.. many of the competitors are no longer able to sell their product- and our product has become a very hot item that everyone is buying. Another big factor, is that our company is growing, and we are getting so busy, we have needed to hire additional employees, we are looking at renting a much larger office space with a warehouse- so our costs are going up significantly as well.

Based on market demand, and exclusivity, and now brand and product recognition we have gained over the past 2 years- and our rising costs- we have decided that it is in our companies best interest to raise the prices on our products.

What is the best way to communicate a price increase to our customers. Do we put up a banner ad on our slider saying prices are increasing in August? Do we send out an email? Mention it in our monthly newsletter? Send a letter only out to past customers and not just registered users on our website? Do we offer some sort of membership buy-in for customers to lock in to the 'old rate'? ie- pay $69.99 for a year of being able to purchase the products at the old price? - in some ways I feel this defeats what we are doing- We are also working on a packaging redesign- and I was hoping that would come on the same time as the price increase- however it's not looking like that are going to synch up.

[dpd1]

It depends on how much they will be raised I guess. I personally would try to down play it... Not announce it. That would be the last thing I'd do. I usually just raise stuff here and there incrementally. I've rarely had anyone even mention it. I think it's one of those things where you might be more conscious of the changes than the public will. But I do think it's nice to offer something in exchange. What I usually do is try to time it with an improvement on the product. Obviously nothing that will nullify the higher price, but just something that at least gives the impression it has been improved, which then takes a little of the sting out of the increase. But honestly, I would bet most people don't even notice increases that much, unless it's really big.

[akmac]

I would not announce a price increase. I've seen a bump in sales after an increase. Not sure why, but it might be because people see the value increasing, and want to get in before it increases again. Just raise it.

[piatkow]

I've seen a bump in sales after an increase.

Depends on product but price is sometimes seen as a quality signal.
We don't know enough about Bruiseviolet's products or business model to be sure of the best approach. I would certainly give advance notice to any customers who have regular orders and maybe offer to hold their prices for a short time after the general increase.
If you have account customers or orders that are to be shipped and billed at a future date then you need to take care to ensure that these are invoiced correctly.

[HRoth]

I do not announce price increases either. I just raise the price. People almost never ask about why something went up.

[piatkow]

I do not announce price increases either. I just raise the price. People almost never ask about why something went up.

Depends on customer base. I have regular customers who just send an email and put a cheque for the same value as last time in the post at the same time (I actually give a discount for on-line card payments but that's another story)

[votrechien]

Is this a product people purchase on an ongoing basis? In that case, it might be worth it to communicate it to them.

As HRoth said, people generally don't ask why a price went up. When a customer has with us, I'll say "on this order we'll give you the old price, but after this the new price is in effect" which makes them feel appreciated.

[RhinoFish]

i concur, generally no announcements. if you have a core group of repeat buyers, they are who i'd be concerned about. contact the largest ones and ones with longest buying history, offer to hold their prices for 3-6 months or something. let them know you are thinking about them and their loyalty shown to you. individually contact them - doing so will make sure you're restricting yourself to just a handful. once you start doing this by email, well, let's just say it's habit forming, and you don't want that - it'll annoy your best customers.

[Bruiseviolet]

Our sales have been built on relationship marketing, and many of our customers are repeat buyers- who purchase on a regular basis. We have thought about implementing something where they get the price for one more purchase (which is a lot of work on our end) or doing something where they can purchase a year membership and receive the old pricing for the year.

We aren't sure what- but we are going to inform them of the price increase- because it will be about 10-15 dollars more than the current price of 59.99. We are still figuring our what exact price point we are going to be at- but as for August we have decided to only raise the price on ONE of our product lines, and not all of our products. We are going to slowly phase in raising all of the products by the end of the year.

Thank you to everyone for their input!