The right way to raise prices

[Cornish Steve]

I just read the thread about BT putting up prices. The thing that struck me most about their approach was the deception: increasing rates when VAT dropped so you may not notice. Also, it seems no notice was given to customers in advance so they knew of the increase and could plan accordingly. If a company did that to me, I'd be furious.

So what is the right way to implement a price increase? I'd suggest the following, but would be interested to hear in the opinion and experience of others:

- Be transparent and honest. Customers should not feel tricked.
- Give advanced notice and never back-date a price increase.
- Explain the rationale behind the increase so it makes sense.

What about creative ways to increase prices? For example, what if a company 'rounded up' monthly service charges to the next pound? The price calculation would remain the same, but you'd save your customers the trouble of carrying around a lot of coins. Would this work?

Many companies implement a price increase by reducing the amount of goods, for example from 800g to 750g. Is this fair or just another form of deception? What about forcing customers to buy packs of 6 batteries instead of 5 batteries at a time?

 

[sysops]

- Be transparent and honest. Customers should not feel tricked.
- Give advanced notice and never back-date a price increase.
- Explain the rationale behind the increase so it makes sense.

I think this is fine for service sector companies, like BT etc, but it would never work in retail.

Imagine these two scenarios:

1. You walk into a shop, and see something you want to buy. It is priced at £49.99. You think this is reasonable. You take it to the checkout and buy it.

2. You walk into a shop, and see something you want to buy. It is priced at £49.99. Next to the price, there is a Was price of £44.99. Next to the checkout, there is a notice saying "please note that all prices have increased by 10% since last week".

Do you think you're as likely to buy?

 

[Subbynet]

I just read the thread about BT putting up prices. The thing that struck me most about their approach was the deception: increasing rates when VAT dropped so you may not notice. Also, it seems no notice was given to customers in advance so they knew of the increase and could plan accordingly. If a company did that to me, I'd be furious.

So what is the right way to implement a price increase? I'd suggest the following, but would be interested to hear in the opinion and experience of others:

- Be transparent and honest. Customers should not feel tricked.
- Give advanced notice and never back-date a price increase.
- Explain the rationale behind the increase so it makes sense.

Companies never do this, the cost to notify outweighs the number of complaints. Electricity and Gas companies routinely abuse Direct Debit, and once a phone company owed me £400 odd quid... I was in Credit by £400!.. Did they think oh we have his money, shall we not send a bill this month? No. Did they send me a letter asking me if I'd like it back? No... I had to listen to Mozart for 30mins pressing 1-2-3 a few hundred times before getting though to anyone and being able to claim a refund. (Yes, it was an 0870 number to boot)

I felt robbed!

What about creative ways to increase prices? For example, what if a company 'rounded up' monthly service charges to the next pound? The price calculation would remain the same, but you'd save your customers the trouble of carrying around a lot of coins. Would this work?

I've never known of any monthly charges which you pay for in cash. Its simply not a real option here... You pay by Direct Debit (Standing Order if your wise) or they charge you more anyway. They ain't backwards at coming forwards in the UK. (Just like in the US no doubt)

Many companies implement a price increase by reducing the amount of goods, for example from 800g to 750g. Is this fair or just another form of deception? What about forcing customers to buy packs of 6 batteries instead of 5 batteries at a time?

Yep so true. Anyone who's ever eaten a Mars bar or Dairy Milk can tell you these have reduced in size over the years. Its plain deception, but hey look at our new packaging! Don't you like our packaging?

What's worse is the companies who from the outset put their products in larger box than it needs.... Take a household item, say Washing Machine Powder... You open the box, and the top 5-8cm is completely empty, but the box looked nice and big on the shelf.

If this happened to the great British Pint, they'd be uproar! lol Although one day I do expect to walk into a bar and think - ain't this glass - erm smaller? :redface:

 

[Richie N]

A lot of the chocolate bars have been reduced in size, including creme eggs and also quality street.
They are all at it these days....

 

[An Oasis]

A lot of the chocolate bars have been reduced in size, including creme eggs and also quality street.
They are all at it these days....

So this is a mainstream technique but...is it a good one? Personally it's the worst thing that they could do if they want to treat me as stupid they can try but there are loads more fish out there.

We adjust our prices on the basis that we feel X is either too cheap or conversely too expensive but our primary focus when we adjust prices is "does this still provide the client with good value for money".

Not sure about you folks but I know when I think a supplier is giving me the run around they can bet that I'm suddenly in the market for alternatives, otherwise I'm extremely loyal to our suppliers.

On topic there is a hideous ad for "Maureen on 118 212 she's the best directory enquiry service...". Talk about clueless idiots in the marketing world, all this ad says is that they've been stuffing the clients who don't want to pay their stupid overcharged rates so they gone somewhere else...is that the best a large company like this can come up with, t*ssers.

 

[UKSEOAgency]

I have yet had to increase pricing on my service, however if i was forced to increase the pricing, I would increase the service level the client received, ensuring they are still getting value for money.