April 30, 2014

Need To Raise Prices? Here’s 1 Innovative Suggestion

pricing small businessIf you keep an eye on your food product costs, from time to time you’ll realize that you need to raise your prices in order to maintain the types of margins you want.  This is natural as over time food costs themselves increase and so too will how much it takes for you to make your product.  While price increases should never be made without a lot of thought for how the customer will react, if you find yourself faced with this decision one idea may be to increase price and quantity at the same time.

One independent food store located near me did this recently and it was the first time I’d seen it done.  In the past, their customers could buy 6 *cookies* (it’s not actually a cookie shop) for $6.  However, when they realized that they needed to increase prices what they did was change-up the entire equation for consumers.  Now, instead of 6 cookies for $6, you can get 7 cookies for $7.50.    Technically that is a per-unit price increase but by changing both the quantity and the price at the same time that increase is much less apparent to consumers so much less likely to make them think twice whether they want to buy the cookies or not.

This strategy may not work for every product type but for those it does, this might be a strategy to consider when you find yourself needing to make a price increase but not wanting to lose customers from it.

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