Each month, I ask my Instagram community to join me in a focused, crowd-sourced discussion of a specific subject. For the month of July, we dove head-first into pricing… one of my favorite topics. Often worried about, but seldom discussed, I welcomed an opportunity to roll up my sleeves and see how I could help.
When was the last time you implemented a price increase? How did you roll it out? How was it received?
THE LUCKY BREAK COMMUNITY SAID…
lillabarnclothing: Ah! I need to do this now. I’m going to up prices by 10%. Rolling it out next week after my summer sale.
stellachroma: At my rebrand a year ago. Just did it. No one batted an eyelash. Granted, it was at a rebrand. 🙂
yukonsoaps: A year and half ago. I just did it. No questions asked! And sales increased!
cocosabon: I increased on two products last year. I informed my customers prior to the increase and explained why it was necessary. No problems at all. ????????
MY THOUGHTS: I recommended that my clients carefully monitor their costs and review them at least once per annum. If a nominal (3-7%) price increase is needed, it’s better to roll those out once a year as opposed to “saving them up” for years and then hitting your buyers with a large jump in pricing every few years. Anything less than 10% is typically received well by buyers, provided that the rollout is properly framed. Price adjustments on the order of 10%+ require more of a brand re-positioning (connecting with a new audience) and are decidedly more complicated, but totally possible.
I find that the very subject of price increases unnerves many makers + product designers, but this doesn’t have to be an anxiety-inducing affair. There’s definitely an art to framing the announcement, but we’re usually far more worked up about it than our wholesale partners and retail customers. Need some help in this arena? My instantly-downloaded price increase workshop can build confidence and guide you through the process of designing an elegant announcement. And Price-O-Matic, my product pricing software, can help you keep an sharp eye on costs and profitability, too.
Do you feel like you’re currently charging what your products are worth? If not, what’s holding you back?
THE LUCKY BREAK COMMUNITY SAID:
westcoastleslie: I’m not mostly because I feel like it will hold me back from making sales. And I know you’ll say “those people aren’t your customers” which is true to an extent. But tell me who is going to buy a $200 scarf????????? Honestly, point me in their direction!
idigyourhair: No, but I want to. I feel unknown and feel I need to grow my brand in order to do that. I have made them slightly higher online.
normalish_: Nope. I don’t feel like I am because I’m stuck in this crazy Facebook bubble of small businesses that all feel like we can only charge so much. Even the customers in this bubble complain/dictate if your prices are higher than the average. I’m desperately trying to work my way outta there.
focsimama: I wasn’t but I will be once this new brand launches.
scentshomebodybaby: Agree with all these comments!! Just trying to charge enough for people to purchase to make my brand known. It’s so hard.
sasaloo.living: There is the never ending question!…. among others, lol.????????
MY THOUGHTS: Pricing is decidedly complex. It brings together many elements (brand presentation, audience awareness, consumer psychology, distribution strategy, tricky math… blech!) and we must take all of those elements together to create a narrative and a presentation that both taps our people and keeps food on our tables. That’s no simple task!
Finding the right people, crafting a capable narrative, and increasing your company’s ability to communicate value are all pillars of strong brand development. If you haven’t laid the critical foundation for your brand, then it’s virtually impossible to command the prices you want or need. I echo the sentiments above: we must break out of our bubbles by becoming aware of the larger competitive landscape and staying tethered to the players in that market. As to the $200 scarf question, I ask: Are there $200 scarves on the market? If so, there are $200 scarf people out there!
Not everyone can afford a $200 scarf, and not everyone who can afford it wants to spend that sum, but pricing runs along a spectrum. You could buy a new car for $12,000 (Smart cars) or a new car for $260,000 (hello, Ferrari!), and virtually every price point in between. The Ferrari peeps know their audience and they aren’t worried about the Smart car audience. It’s up to each of us to decide where on the pricing spectrum we want to play, and the key is to build value that’s commensurate with the price tag we attach to our work. You can’t sell a Smart car at Ferrari prices, but you can sell a Ferrari at Ferrari prices. And you’ll need to create a Ferrari-worthy experience for buyers at a premium price point. Think: flashy showroom, attractive salespeople in elegant suits, champagne as you shop, etc.
We can all take the reigns on our pricing by doubling-down on our attempts to control costs and create efficiencies. In this case, every penny saved really is a penny earned. I’m often tasked with helping my clients develop more efficient production strategies, seek new suppliers, and offer a “bird’s eye” review of expenses to help trim things down. Once we’ve become as efficient as possible, then the work pivots to cultivating the customers we want, becoming more aware of the market, and sending the right signals to show that we’re creating premium products for a specialty audience. It’s possible, I promise!
If you want to work on becoming more intimately aware of your audience, broadening your view of the marketplace, and upp’ing your brand presentation, then I invite you to explore Brick House Branding, my 9-week brand mentorship. Enrollment for the first live semester of 2019 opens on October 2, and the program is now available in an instantly-available “On Demand” version, too.
JOIN THE CONVERSATION
Be sure to stop by the Lucky Break Instagram, where every month we chat about all things business. I’d love to hear your thoughts and hope you’ll lend your voice. Search the #LBCWantstToKnow hashtag to weigh in! In August, we’re chatting all things website.