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What to do before you start increasing prices

groupplanning26668223.jpgCustomers absolutely hate it when prices go up but when your vendors are increasing the cost of your raw goods and other materials, it puts you in a difficult position. Do you end up increasing prices to make up for the price increase on your end or so you bite the bullet and continue focusing on selling products to your customers despite the increase?

The good news you do have is that your customers will pay more money for your products or services if they feel that you have an exceptional product or service. What type of value are you providing to your customers? The good news you do have is that although your prices increased and you need to increase your prices, your existing customers will continue to pay for your products and services. They already know what type of value you provide and what type of quality they can expect and although money may be tight, they will stay pay for it.

Prices are frustrating to figure out because is you prices them too high you are going to price yourself out of the industry with some customers. Pricing yourself too low shows customers that you do not have quality products.

You will sacrifice revenue when you decrease prices, which hurts your company when your raw goods are increasing. Here are some things that will help you increase prices in an effective manner:
1. What is your break-even point? Try to set your price at least 50% ahead of that. Many companies double or even triple the price of their raw goods in order to actually turn a profit.
2. Competition. What are the prices of your competitors? Do you have higher prices or lower prices? You need to watch their prices closely and stay within the same range and attract customers based on your quality if your prices are higher.
3. Offer value. Before you can raise prices, you need to make sure you are providing your customers with value. Why do they want to purchase your products? You need to be sure that your products and services do offer value so you can increase prices and justify the price increase to your customers.

Promoting your business is a big part of getting the attention of your customers and showing them a certain level of value. The information that they find pertaining to your business must be positive and portray your company in a positive light no matter. Start a blog and a newsletter and start offering quality content and information to your customers versus leaving the search engines with information written by other people about your business. Here are some of the basic things you need to include on your website in order to generate the interest from your customers that you are looking for;

  • Offer a definition of the company. Who are you and why should your customers work with you?

  • What are your products, why should your customers buy them over other products in the same industry?

  • Why is your company better from all the others in the industry? What reasons can you give that justify the higher prices?

As you define your company, be sure to list some of the things that make your company's image stronger. Perhaps you have worked with larger corporations that have healthy reputation. Another thing to include if your background information, how did the company get started and what made it become so successful? Remember you need to market more than your products; you need to focus on marketing the business as well so you can build your reputation.

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