Why is it that Netflix can announce a slight price increase and the majority of people shrug it away but if the price of a loaf of bread goes up, the masses are ready to riot in the streets? It may have to do with value and perceived value. One thing is for sure, you always risk losing customer’s business and trust with even a slight price increase.
One of the most challenging tasks companies face on a regular basis is to hold their old customers when they increase the price of their products. With the increase in market conditions, price inflation and world economic factors, there is a requirement to also enhance the price of products and services.
However, this is not easy.
There are ample risks involved. Because there are chances that the moment prices are increased, existing consumers will lose their loyalty for the product and look for cheaper alternatives. As a result, the product provider can lose a lot of revenue.
Explanation for Price Hike
If the scenario of the market is such that there is no option but to increase price, then one requires increasing it. For example there can be a situation where the product supplier has increased its prices roughly 10% in the last year. Then you cannot avoid but increase the prices at least by 5%. An explanation can be given to the client base that the product price has been partially increased and not completely and this can help retain your customers.
"It Could Always Be Worse" Comparison
In situations where your competitors have all increased their prices it is important to disclose this information to the user base. A comparison in between the price increase of competitive product and your product will help them understand the actual potential of your product.
Sometimes, your customers will do this for you. Netflix has announced price increases several times during the past 5 years. Many took to social media to voice their opinions. Although there was no lack of complaints, many customers compared the price of Netflix to the price of cable television which is much more expensive.
Another way for a comparison approach to work is to allow some customers to keep using your product or service for the same price, but remove a feature or option. To use Netflix again, in 2016 they announced a price increase from $7.99 to $9.99. Customers who wanted to continue to enjoy Netflix as is will now pay $9.99. However, if some customers did not want to pay that price, they could still have full access to the site for $7.99 but would not be able to view in HD or view in multiple screens.
This type of comparison will allow customers to see the difference in service and they can then decide if it is worth paying the extra 2 bucks to watch House of Cards in HD. By the way, it is.
However, it is possible to increase prices without adding an entirely new service to your arsenal. Instead, deliver an enhanced result.
The best way you can retain old users and increase price is to add something to the product to increase its worth. A sweet deal as it is commonly termed in the business world, this makes sure your consumers remain bonded to your product even if a price change has occurred.
It’s very important that the value that you are adding is worth it to the customer. Adding a feature that isn’t valuable to the customer will just backfire on you. Rule of thumb is to not charge for cosmetic changes. If you produce an all natural line of iced teas, enhancing label designs, for example, is not a good reason to charge customers. But adding pomegranate or acai juice to your tea may be a good reason for customers to pay more.
This is going to be tougher for those of you in the service industry. Adding a service means more time you must spend. However, it is possible to increase prices without adding an entirely new service to your arsenal. Instead, deliver an enhanced result. If you own a digital marketing company, instead of branching out to offline marketing, deliver more exposure for your customers through different social media networks and blogs.
Another trick is to transform quantity. Here one is recommended to offer a big quantity product at lesser price point. The customers will obviously look out for products with high quantity. For example, a customer usually purchases a 4 bottle beverage at a particular price.
Now, since the overall price has been enhanced you compel the customer to buy a 6 pack sealed beverage set at a good price. Hence, cost is reduced but profit is maintained.
A premium or a freemium product is that one which involves price repositioning. Here, customers are recommended to buy an alternative product which costs more but is so attractive that the customers are not lost. For a premium high priced product, a free offer also helps keeping customers bonded with the brand. Hence, the premium product helped you increase your price but the freemium addition kept the attraction quotient intact.
Dropbox is a good example of how to offer a freemium. They allow you to use the software to backup and share files. I first used Dropbox when the photographer who took my wedding photos wanted us to review the photos. I loved it. But Dropbox’s free version allows you to only use 2GB of space. That amount of space can be used pretty quickly. The premium version is $9.99 which is affordable and valuable for those who use a lot of photos and video.
Choose the Perfect Time
Timing is the most crucial aspect in every business. If the price of a product is increased at around a time when the year is coming to an end then it is taken as a natural step. As a result, customers are not lost. People do expect new things in a New Year and hence even if a product’s price is made higher at this time, people accept it naturally. It is because they expect a new value being added to the existing product due to which its price has been increased.
The basic idea is not to rush at all when it comes to price inflation. Prices of products or services must be enhanced gradually and not all of a sudden. A small and exponential growth in price point will not cause adverse effect to your product. It will not lose old customers rapidly. A sudden price hike can cause negative effect to your entire user base at one go thus creating huge amount of loss of money, customer and reputation.
The best way you can retain old users and increase price is to add something to the product to increase its worth.
The Free Trial Approach
The last way to do this task is to undergo a trial and error method. But here’s a warning; no matter how much you plan, there still remains a risk of losing a few customers on the eve of a price hike. Hence, it doesn’t do much good to worry about it. If the requirement of the price enhancement is such that it is absolutely mandatory then you must moderately increase it.
A little shift in price will not affect the business adversely. To conclude, you must understand market conditions and the activities of your competitors in order to take strategic decisions about price inflation. Feedback from your own customers can also help you gain priceless insight about your product and its price point.
This article was first published on StartUp Mindset.
For decades, women have been unknowingly suffering from PSD and intergenerational trauma, but now Dr. Valerie Rein wants women to reclaim their power through mind, body and healing tools.
As women, no matter how many accomplishments we have or how successful we look on the outside, we all occasionally hear that nagging internal voice telling us to do more. We criticize ourselves more than anyone else and then throw ourselves into the never-ending cycle of self-care, all in effort to save ourselves from crashing into this invisible internal wall. According to psychologist, entrepreneur and author, Dr. Valerie Rein, these feelings are not your fault and there is nothing wrong with you— but chances are you definitely suffering from Patriarchy Stress Disorder.
Patriarchy Stress Disorder (PSD) is defined as the collective inherited trauma of oppression that forms an invisible inner barrier to women's happiness and fulfillment. The term was coined by Rein who discovered a missing link between trauma and the effects that patriarchal power structures have had on certain groups of people all throughout history up until the present day. Her life experience, in addition to research, have led Rein to develop a deeper understanding of the ways in which men and women are experiencing symptoms of trauma and stress that have been genetically passed down from previously oppressed generations.
What makes the discovery of this disorder significant is that it provides women with an answer to the stresses and trauma we feel but cannot explain or overcome. After being admitted to the ER with stroke-like symptoms one afternoon, when Rein noticed the left side of her body and face going numb, she was baffled to learn from her doctors that the results of her tests revealed that her stroke-like symptoms were caused by stress. Rein was then left to figure out what exactly she did for her clients in order for them to be able to step into the fullness of themselves that she was unable to do for herself. "What started seeping through the tears was the realization that I checked all the boxes that society told me I needed to feel happy and fulfilled, but I didn't feel happy or fulfilled and I didn't feel unhappy either. I didn't feel much of anything at all, not even stress," she stated.
Photo Courtesy of Dr. Valerie Rein
This raised the question for Rein as to what sort of hidden traumas women are suppressing without having any awareness of its presence. In her evaluation of her healing methodology, Rein realized that she was using mind, body and trauma healing tools with her clients because, while they had never experienced a traumatic event, they were showing the tell-tale symptoms of trauma which are described as a disconnect from parts of ourselves, body and emotions. In addition to her personal evaluation, research at the time had revealed that traumatic experiences are, in fact, passed down genetically throughout generations. This was Rein's lightbulb moment. The answer to a very real problem that she, and all women, have been experiencing is intergenerational trauma as a result of oppression formed under the patriarchy.
Although Rein's discovery would undoubtably change the way women experience and understand stress, it was crucial that she first broaden the definition of trauma not with the intention of catering to PSD, but to better identify the ways in which trauma presents itself in the current generation. When studying psychology from the books and diagnostic manuals written exclusively by white men, trauma was narrowly defined as a life-threatening experience. By that definition, not many people fit the bill despite showing trauma-like symptoms such as disconnections from parts of their body, emotions and self-expression. However, as the field of psychology has expanded, more voices have been joining the conversations and expanding the definition of trauma based on their lived experience. "I have broadened the definition to say that any experience that makes us feel unsafe psychically or emotionally can be traumatic," stated Rein. By redefining trauma, people across the gender spectrum are able to find validation in their experiences and begin their journey to healing these traumas not just for ourselves, but for future generations.
While PSD is not experienced by one particular gender, as women who have been one of the most historically disadvantaged and oppressed groups, we have inherited survival instructions that express themselves differently for different women. For some women, this means their nervous systems freeze when faced with something that has been historically dangerous for women such as stepping into their power, speaking out, being visible or making a lot of money. Then there are women who go into fight or flight mode. Although they are able to stand in the spotlight, they pay a high price for it when their nervous system begins to work in a constant state of hyper vigilance in order to keep them safe. These women often find themselves having trouble with anxiety, intimacy, sleeping or relaxing without a glass of wine or a pill. Because of this, adrenaline fatigue has become an epidemic among high achieving women that is resulting in heightened levels of stress and anxiety.
"For the first time, it makes sense that we are not broken or making this up, and we have gained this understanding by looking through the lens of a shared trauma. All of these things have been either forbidden or impossible for women. A woman's power has always been a punishable offense throughout history," stated Rein.
Although the idea of having a disorder may be scary to some and even potentially contribute to a victim mentality, Rein wants people to be empowered by PSD and to see it as a diagnosis meant to validate your experience by giving it a name, making it real and giving you a means to heal yourself. "There are still experiences in our lives that are triggering PSD and the more layers we heal, the more power we claim, the more resilience we have and more ability we have in staying plugged into our power and happiness. These triggers affect us less and less the more we heal," emphasized Rein. While the task of breaking intergenerational transmission of trauma seems intimidating, the author has flipped the negative approach to the healing journey from a game of survival to the game of how good can it get.
In her new book, Patriarchy Stress Disorder: The Invisible Barrier to Women's Happiness and Fulfillment, Rein details an easy system for healing that includes the necessary tools she has sourced over 20 years on her healing exploration with the pioneers of mind, body and trauma resolution. Her 5-step system serves to help "Jailbreakers" escape the inner prison of PSD and other hidden trauma through the process of Waking Up in Prison, Meeting the Prison Guards, Turning the Prison Guards into Body Guards, Digging the Tunnel to Freedom and Savoring Freedom. Readers can also find free tools on Rein's website to help aid in their healing journey and exploration.
"I think of the book coming out as the birth of a movement. Healing is not women against men– it's women, men and people across the gender spectrum, coming together in a shared understanding that we all have trauma and we can all heal."