аЯрЁБс>ўџ -/ўџџџ,џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџьЅС3 №ПЉjbjb^^ &h<h<ЉџџџџџџlЂЂЂЂЂЂЂњњњњњ  њE ,e … l0Ђ0ЂЂ"ЂЂЖ"и"ЂЂЂЂьЂЂ Ж!#Оњњ@жEEё ё УхHow to Raise Prices without Raising Prices By Paul Herbig Prices. We have all lived through severe deflationary pressures these last few painful years. Price hikes are not sticking : 95% of execs say competition is more intense than ever before; 89% of execs say they are being hammered on price more often; 82% say buyers are more knowledgeable than ever before; and 81% said buyers were less loyal than in the past. Businesspeople are moaning more than ever before they can’t raise prices while their costs continue to climb and the resulting squeeze is killing them. Part of this problem deals with global capacity glut which means it is a buyer’s world these days. Moan all you want, it is not going to change the world. Can you raise prices? Can you keep your prices high? Yes. You can but it will take effort to do so. How do you then raise prices? Let me count the ways. 1) Packaging. You can do what the tuna industry did or what happened to potato chips. Tuna used to be sold in small 6 1/2 ounce tins. Squeezed, the industry cut each can to 6 1/4 ounce and now it is down to 6 ounces. In recent years, potato chips have followed this tactic. Put less of a product in the same size container. This will work as long as it is done in small increments not noticeable by the average consumer. However, odds are it will be noticed by some, especially by consumer advocates and your more sharper customers. If you do try this tactic, be prepared for the inevitable backlash. 2) Cruise lines were also hurting by price wars and pricing pressures. They found a way around this by keeping their attention-grabbing list prices very low but started charging additional fees for items that were once free. Once again be prepared to state the bundled price if asked by some sharper customers or those burnt by paying twice as much for the product as they were initially expected. Not particularly well suited for businesses with regular repeat clients. 3) Automotive manufacturers have taken the opposite tact as cruises: they upped the prices and included in the higher prices what used to be optional equipment. They can justify the higher prices by all the add-ons (which not everyone wanted). Just prepared to provide sufficient benefits for all the now standard options you are including. 4) Caterpillar has always charged premium prices compared to its competitors. It can do so by having its salespeople show a true comparison of all costs involved for all comparable products. The comparison starts with the list prices of the models (which in the beginning looks quite heavy for Caterpillar). To this price are added services, support, quality measures, delivery, spare part availability and the additional costs involved for you or to the competitor to supply what Caterpillar provides inclusive with their list price. In essence, a true cost of ownership is created. By the time Caterpillar gets done, the client usually wonders how Caterpillar can charge such low prices for all they are providing and clearly indicates their product is by far the better buy even though the initial price might be higher. . . high lifetime savings that buyers might otherwise overlook. This is an excellent method if you can actually show the savings over a lifetime’s use of your product. 5) Via Comparison charts and testimonials, create trust and credibility. Show results of satisfaction surveys online and if it comes from third party research , all the better. Happy customers who are glad to act as reference or testimonials are far more credible than your own words or utterances from your paid salespeople. Do not be afraid to compare your product and services to that of the competition . . . even provide links to their sites to help customers compare. This works well when your product does. 6) Keep customers in the loop of new projects, new initiatives, make them feel as if they were part of the team rather than just a customer. Relationship marketing is not overrated. Sophisicated companies will not defect for a dime or a buck. If they know your company and your product and have had excellent service throughout the relationship, peace-of-mind and ease from risk is well worth the small premium you charge. 7) Use Brands . . . branded goods routinely are given a premium by customers . . how much would you (and do you) pay for Ritz Crackers or Saltines than for Generic versions. A considerable premium. Why? Brands are the result of many years of promotion. They represent consistency, a risk free choice, and as such people will tend to pay more for risk avoidance ( Brands are not just for consumers: During IBM’s heyday the oft used phrase “An MIS manager was never fired for choosing IBM” well described the principal reason for its dominance in business-to-business markets at that time). Brands portray a promise between the company and the consumer: We promise to continue making that high quality product you love and you promise to be loyal to us. Coke and Pepsi may be priced the same but they hold a consistent premium over Sam’s or store brands. 8) Intellectual property rights . . . patents, trademarks, or copyrights . . . can provide you with a degree of buffer over your competition . . . particularly if you can make a certain product and they can not. When no one else can legally sell what you make, you hold pricing power. However, modern day global pirates all too willingly and easily will copy your product and see knock-offs on the world stage. Patents are fine but smart competitors can find ways around your patent. Basically all holding onto an intellectual property right will buy you is time and a small barrier. 9) High entry barriers . . . the town newspaper is a one-newspaper town, the local utilities are the only game in town. However, in the internet age, knowledge is available instantaneously and for free. Even the utilities must worry about competition. It is only a Magninot line, appearing to be invincible but easily gotten around. 10) Increasing returns . . . e-bay and monster.com are excellent examples. Everybody goes to buy and sell on e-bay because everybody goes there. The more popular a store becomes, the more people who want to be seen will shop there, and even more popular and status the store becomes. It is a snowball effect. But real nonetheless. Well there you have it. Ten ways to raise prices even in this buyer-dominated era. I’m not saying you can use all of them but if even one works, it is worth it. 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