Best Time for a Price Increase

[Sparetoolparts]

Hi guys

I'm considering a 3-5% increase on my sales price, but I was wondering what do you feel would be the best time to carry this out. Because a large chunk of my sales are seasonal (Lawn and Garden Products) am I better waiting until May then upping my price or do it now, which would mean although i'm getting less sales, the sales I am getting are making me more profit so reducing the hit on drop of sales quantity. My old boss always harped on about reducing workload but increase profit on each sale, I never bought into it until now, since the guy doing all the selling and the labour too!

 

[japancool]

You're assuming though that you will take a hit on sales volume. That may not be the case.

 

[Belford]

Maybe up your price now and offer a January sale 3-5% off

 

[DD-Matthew]

Absolutely agree, make the increase now and offer some sort of discount.

This will make the increase not look so daunting.

- Matthew

 

[Alan]

I think you have some great advice there. Increase now, offer early season discount.

 

[Raw Rob]

Maybe up your price now and offer a January sale 3-5% off

Isn't there some law which means that the price has to have been higher for a certain time before you can discount it?

 

[japancool]

Isn't there some law which means that the price has to have been higher for a certain time before you can discount it?

They have to have been on sale for a meaningful period of time before you can claim that the price is a "sale" price, but there's nothing to say you can't set whatever price you like.

 

[Lovelybear]

If you want, you can increase the price now, meanwhile, do a giveaway activities or discount for a period. It seems still attractive for the customers.

 

[Sparetoolparts]

To be Honest I don't want to do any giveaways/discounts as the whole reason for the price increase is to increase profits from an average of £5 per sale to £7 so my margin is quite small as is and I have little left on the bone for give away's/discounts BTW I sell spare/replacement parts for powertools

 

[Ashley Wright]

Whats stopping you increasing now? You should be testing your prices all year round, if not how do you know what your sweet selling point is?

 

[Sparetoolparts]

Up until now, I haven't been greedy enough to increase my prices as the site was a second income source so as long as I was get an extra £1500-2000 a month in my account I was happy, but I'm now going part-time at work in my 9-5, so the website will need to cover the loss of earning hence the interest in price/profit increase

 

[Scott-Copywriter]

It depends on how many sales are from new customers vs repeat customers.

The price increase can only be noticed if you have a large proportion of visitors who saw the previous price, otherwise they won't know any different. Unless most of your sales are from existing customers, then you don't need to worry about "softening the blow", so to speak.

One of the biggest factors in impacting your sales is psychological pricing. For example, a price increase from £160 to £170 may not make any difference, but a rise from £195 to £205 increases the perceived cost much more than the actual monetary cost.

For this reason, it would be worth tailoring each price increase individually, especially when it comes to your most popular products.

Another trick is to increase prices incrementally, so try a 1% rise first and measure your sales levels/conversion rates over the following few weeks. You may be able to continue these incremental price rises until you reach a point where your sales take a noticeable downturn. This will help you to find the "sweet spot" which achieves the most profitable balance between sales and price levels.

 

[Sparetoolparts]

Hi Scot

Yea that's what I was thinking too the psychology of it all, I am not going to up my prices on anything under £3 as these types of parts are most likely a small screw or washer and people will tend not to want to spend £3+ on a screw which is costing me £0.20 I figured if someone is willing to spend £14 for a part they will pay £16 without any thought about it, I have over 1 million sku's to update, so it needs to be a blanket update by percentage/set amount and make use of price groups and my good old friend the Vlookup in excel.

I don't really have any best sellers which standout from the crowd as again I have over 1 million SKU's and most of my customers are firs-time users to my site and even if they were repeat customers the chances are small they would want the same parts twice

As I said I want to make £7 per sale on most sales. and I will let that run for a few months then chance my arm again, for another £2 increase and see how I get on, I will update you guys on the outcome of the experiment in Feb after the dust has settles

 

[Nupoor Desai]

At the end of year and at the time of big festival

 

[mtools]

Hi Scot

Yea that's what I was thinking too the psychology of it all, I am not going to up my prices on anything under £3 as these types of parts are most likely a small screw or washer and people will tend not to want to spend £3+ on a screw which is costing me £0.20 I figured if someone is willing to spend £14 for a part they will pay £16 without any thought about it, I have over 1 million sku's to update, so it needs to be a blanket update by percentage/set amount and make use of price groups and my good old friend the Vlookup in excel.

I don't really have any best sellers which standout from the crowd as again I have over 1 million SKU's and most of my customers are firs-time users to my site and even if they were repeat customers the chances are small they would want the same parts twice

As I said I want to make £7 per sale on most sales. and I will let that run for a few months then chance my arm again, for another £2 increase and see how I get on, I will update you guys on the outcome of the experiment in Feb after the dust has settles

Could you not update your SKUs depending on price? Export to csv, arrange by price, select a load that are at same / similar prices and update that way? If you've got a million SKUs (incredible btw?!) then you could increase 1,000s at a time this way? I'm sure there's probably even some sort of script that an excel wizard can use!

 

[Sparetoolparts]

already updated 95% of them (Will finish the rest before xmas)

If you use Magento for your E-Commerce site and want quick uploads/updates you best use Magmi

So far my sales have flat lined! 1-2 a day down from 10-15 :-o

But I'm not worried about this yet, as I have a notice on my checkout page informing customers that there are no dispatches until 2016 (suppliers are on holidays) I have also turned off/paused my Adwords account. Come the 6th Jan everything goes back to normal and I will then truly be able to see if the £2-3 price increase will sink me or not.

 

[RepricerExpress]

Essentially, the best time for a price increase is when demand is high. And when demand is low, you may want to consider a price decrease. It's definitely worth testing out for a period of time to see what price gives you the best profitability.

If you sell on Amazon, repricing software can help you compete with your competitors with dynamic repricing.

For example, if your nearest competitor sells out, repricing software can help you increase your price and profits.

 

[Sparetoolparts]

Just a little update my Feb Sales Figures after the price increase are on a par with Nov last year, so I'm no worse off than before

The peak season for Lawn and Garden is coming up soon so hopefully I will reap the rewards of the increase by April-May

 

[antropy]

That's good to hear! Pricing is always difficult and it's fascinating to hear when a price increase doesn't have a negative effect on sales.

 

[RepricerExpress]

Well done, thanks for the update.

 

[JD@fifty6]

How long have you been going @Sparetoolparts? I'm presuming from your comments less than a year, but if not then you'll be better off comparing February 2016 against February 2015 to assess the impact. Then again, a lot happens in a year besides price changes!

Good to hear you're happy with the change, either way. Long may it continue.

 

[Sparetoolparts]

Hi There

We have been trading 2 1/2 years now, but only in the last 12 months have we started to see good sales figures as we have added in new brands and increased our product range by approx 200% so I can't really compare Feb to Feb as Feb 2015 had alot less product line and a weaker SEO impact

 

[JD@fifty6]

Sorry for the huge delay in this response, but it'll be worth checking out the conversion rates in that case – once people are on the site that's your main metric to see what impact a price increase has had. How has it gone in the past month since your reply?

 

[Sparetoolparts]

well the reporting from Analytic s was a bit iffy before I got the new payment gateway installed but I am comparing: Feb 2016 to Nov 2015 (Dec/Jan are very quiet for us) so im taking this with a pinch of salt

and it is showing:
1.54% vs 1.06% conversion rate
285 vs 184 conversions

 

[JD@fifty6]

Nothing bad about that then! I doubt the increase in price increased your conversion rate, but it obviously hasn't had a detrimental effect. Good work.

 

[Gecko001]

I thi

To be Honest I don't want to do any giveaways/discounts as the whole reason for the price increase is to increase profits from an average of £5 per sale to £7 so my margin is quite small as is and I have little left on the bone for give away's/discounts BTW I sell spare/replacement parts for powertools

I am a bit dubious about increasing prices to increase profits. Customers do not care whether you make profits or not. All they are interested in is the price, the service and the quality of the products. I would look to those aspects of your business as it is those which will keep you ahead of your competitors.

 

[Sparetoolparts]

well I'm normally as cheap as anyone online and cheaper on the more expensive parts, the price increase was because maybe I was too cheap and so now I'm not working for peanuts.

I'd even be tempted to do another wee increase just to see what difference it made

 

[billmccallum1957]

I would go for a rise before the season gets into full swing, someone looks for something now and comes back to buy in two weeks to see a price increase will not look good.