I used to work in industries where a yearly price increase was the norm. Every November the product teams would get a memo from Finance letting us know what our expected increase would be – usually 3% to 5%. We updated our price lists and told our customers that this was “due to inflation.” There would always be a few grumbles – but we rarely lost a customer. This drove a lot of “end-of-year” sales which in turn made Finance happy.
The good old days are over. A price increase not only angers customers, but makes them seriously question whether they can do without the product – or get it from a lower priced competitor. When we get used to “doing without” in our personal lives, we adopt the same philosophy in business.
There are ways to increase prices with a better chance of success. It involves a lot of communication around value propositions and even product restructuring. Above all – customers want a choice. They don’t want to be forced to accept something they don’t like. They may be willing to do away with certain product features vs. paying more.