Over the years I have seen hundreds, if not thousands of shop owners do irreparable damage to their businesses. This damage occurs when they are mesmerized by the management trainers or consultants who tell them that they can solve all of their problems by raising their prices. At first they are pleasantly surprised to hear that their services are worth more than they are presently charging, because it plays to their ego. They are also told that they have nothing to worry about, because none of their customers will complain. They then jack up their prices and are pleasantly surprised when they discover, as they were told, that not one of their customers objected to the new pricing. Over the next few months profits typically swell, and the shop owners smile all the way to the bank. Then, unfortunately, in far more cases than you would imagine, 9 to 12 months later these shop owners find that all of their good customers are gone, and the reason is pretty simple: Rather than complain, their good customers just take their business elsewhere. So before you listen to the pied pipers who tell you that you can solve all of your problems by jacking up your prices, I wanted to share a different strategy with you. It’s one that I used to grow some really great shops, so I know it will work wonders for you, too.
First of all, any price increase should be small and incremental. You will find that small increases will not only be considered acceptable by most of your good customers, but they will allow you to monitor your customer’s acceptance. When you move forward with this approach, you need to monitor your lost sales at the point of sale to ensure there is no appreciable increase.
Secondly, you will need to perform your customer follow-up calls to keep your finger on the pulse of your customers, and to enable you to detect any early signs of price resistance.
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