Practical considerations of increasing your price
First, a reduction in sales after a price increase is not a given. If your price increase is handled properly, don’t be surprised if you actually see an increase in sales (we have ample experience in doing this and seeing just these results – just let us know if you need professional healthcare marketing advice).
It’s important to explain why you are increasing your prices to your customers and prospects. You can use this as an opportunity t0 emphasise your benefits, improve your relationship with customers, and underscore your position in a market place. Another way to increase your average price is by pushing your higher priced and higher margin services while making your older, cheaper, lower margin services less accessible.
Practical considerations of reducing your price
I’ve seen many professional service practitioners offer promotional discounts to offset slow summer months or aim to appease economic concerns amongst their customers by progressively reducing their prices. Discounts and price reductions, while sometimes having a positive short-term effect on sales, can undermine your credibility, discredit your value proposition, and in some cases; “train” your customers to not buy from you until your prices are low again.
Worse, reducing prices can have a devastating effect on your profits (as you can see in the above chart). This can have the knock-on effect of making you reduce your costs (by cutting corners on quality) and potentially reduce your service levels (by cutting down on staff) to compensate.
Remember that dropping your prices can be the most unimaginative method of increasing short-term sales. If you can’t sell the value you offer at the price you want, then consider improving your benefits or improving your sales effectiveness.
Lastly, consider the fact that most customers do not make buying decisions solely on the basis of price. What else can you do to convince them that the benefits you offer are worth the price you’re aiming to charge?