In the last post, I shared that your prices are too low and you’re leaving money on the table. If you’ve ever worked at a business when it raised its prices, you probably endured grumbles from customers.
Justifying the increase becomes so exhausting that many merchants take the path of least resistance and swallow the increased expenses. But what if you could raise prices and avoid the grumbles?
The Grandfather Discount
One way to increase prices without risking upsetting or losing clients I call the Grandfather Discount. It works like this:
- Raise prices immediately.
- Announce you’ll keep the old rate for six months.
- Send an invoice with the discount during this time.
- At the expiration, remove the discount.
Here’s Why This Works
- When your client receives the bill, your new price will stare at them from the top line with the discounted price displaying at the bottom. Customers won’t be angry or leave you because you aren’t charging the increase yet. Some might warn you they won’t pay the new price and you can treat it as feedback.
- Each time you send an invoice you’ll subtly remind them of the imminent price change. The grandfather gives them time to get used to the new price. During this time, they’ll subconsciously revise the value you’re providing upward to reflect this higher price.
- Because you’re removing a discount instead of adding an increase, the customer feels (and you can remind them) the benefit they received for six months. This is in contrast to feeling penalized going forward.
- Because you raise prices immediately all new customers will pay your new price. This adds extra profit to every new sale starting immediately.
You may find some clients stock up to buy before the price discount expires. From day one you’ll start booking additional sales.
This simple re-framing technique improved the bottom line of many corporate clients, even some big ones. Try it! Do you think this will work for your business?
In a future post I’ll explain a way to combat merchant credit card fees and other surcharges. Are you tired of shelling out money for unreimbursed costs? I’ll show you how to eliminate these cash drains and turn them into profit centers. Stay tuned! Until then,
profitable business All!