Increasing Your Average Sale - Part 3

Are You Afraid to Raise Your Prices?

In Part 1 we discussed how much more money you can make by increasing your average sale. In Part 2 we used McDonalds as an example of how to cross sell, up sell, bundle, and create add-on sales at the point-of-sale. In Part 3 we have to talk about the one strategy that is easiest of all, just raise your prices.

I know, you are telling me that you can't raise your prices. You don't want your customers to complain, buy less, or leave and never come back. Price is very important to your customers.
Financially, these are hard times. High gas prices, inflation, and financial uncertainty. and you customers have tough decisions to make. The worst mistake you can make is to thoughtlessly raise your prices and loose customers.

With that said, I find that most businesses I work with have many opportunities to increase their prices, in a way that their customers will appreciate.

First think through these major pricing strategies for opportunities.

4 Major Pricing Strategies
Competition Based Pricing - Shopping your competition can amaze you at how low your prices are. Talk with vendors and suppliers who frequently meet with your competition. They can suggest several opportunities for pricing.

Suggested Retail Pricing - Sometimes your prices are below Suggested Retail Pricing when they don't need to be. Sometimes your customers will pay more than Suggested Retail Pricing.

Cost Based Pricing - This is where you do the math and just add a margin or a mark up to the cost of the product or service. If you do your homework and research, you may find reasons and ways to increase your mark-up.

Market will Bear Pricing - By experimenting with pricing you can determine just how much your customers are willing to pay or what price seems to indicate high value to them.

Here are two unconventional pricing strategies to consider.

2 UnconventionalPricing Strategies
Convenience Store Pricing - When we buy products at a convenience store we expect to pay more. We can buy it somewhere else for less, but it is more convenient to buy it at a higher price here. Do you offer something that is a convience? You can raise the price and your customers will appreciate not having to go elsewhere to buy it.

Service Value Pricing - Think about the post office. They deliver mail at a certain price. However, if you want it guaranteed in three days it is a higher price. If you want it guaranteed in two days it is even a higher price. If you want it guaranteed overnight is even a higher price. And the funny thing is, we appreciate it. Do you have a service that you can differentiate in quality, time, or value?

When it comes to pricing, you have to do the math. Don't be afraid to ask for help from someone who is good at numbers. Even if you just add $1 to the price of an item. I had one client that realized that by adding $1 to one product, he made and extra $3,000 per month or $36,000 per year. Not one of his customers complained or seemed to notice. I know it's boring, but take the time to study your costs and break even points. You will see opportunities and possibilities. That's what we thrive on.

Remember, the only company that wins in a price war is Walmart. You should be competing on value which your customers are willing to pay more for.