Pricing Strategy – When To Lower Your Price
Recently there was an article in of my favorite entrepreneurial magazine and it was about “when to lower your prices”.
I think 80% of this article was all wrong.
They argued that if your testing your pricing that you should start higher and work your way down. I disagree with that.
I believe you can provide more reasons why you’re increasing your price than just flat out lowering it.
You see, when you raise your price you can give a real reason why you’re doing it. It gives your customer what they need to accept the price change. You’re building value and trust when you do that.
If you start your prices high and start dropping them you have two problems in play.
One you could have a problem with previous customers who received their product or service at a higher price and now they want a refund or feel like they were mistreated in some way.
When you start low and raise prices you won’t have a customer who wants to give you the difference.
Another reason I think going from high to low is a bad idea is because you’re lowing the value of your product or service. What I’m talking about here excludes special pricing for events and things like that.
What I’m referring to is permanent pricing.
Consider the impact when you begin testing your prices. I suggest you start low and go high from there. You can build value and add reasons where you need to in order to justify large price changes. It’s better than dropping prices and lowering the value of your goods or services.
Look at the car companies for goodness sake. Here they are, they’re in a bad place and have had to slash prices substantially. They have a huge reason to lower prices. They need to move volume. In the end it does lower the value of the vehicles they’re selling.
Think about what it would do to the value of your car for trade in…
You don’t want the same thing for you product or service.
Till next time…
Profit Convergence, Inc.