Times are getting rough and the majority of businesses are experiencing a drop off in revenue. This is leading to many businesses intentionally raising prices on their loyal customers and many businesses that have yet to examine out of date price increase policies. The problem is that our current economic situation isn’t limited to certain individuals or certain businesses, it’s close to everyone that has taken a hit. When individuals and businesses take a hit, they look to lower expenses and maximize revenue. So, what’s the first change or cut made? The product or service that just increased their price!
Here is a story about one of our loyal Austin clients:
Company X rents office space in NW Austin. They’ve been in the same location for over 10 years and they have been a great tenant. Over the 10 year time period, there have been steady price increases with each lease renewal, but these price increases stayed true to market conditions. However, as the economy turned sour, other companies either went bankrupt, downsized or moved from the complex. This has lead to the office complex now offering slashed pricing and great concessions to lure new businesses to their location. Meanwhile, Company X was still getting by, making timely payments and being of top value to the landlord. Then, the landlord tried to go Uncle Sam on Company X – When you’re hurting for money, increase the burden on those most valuable to your income. Company X was upset at the price gouging, and instead of negotiating, they found a bigger and better office space for less money, elsewhere.
Once you raise your price and run off loyal customers, what are you left with? You’re left starting over – More money blown on cost per conversion, not knowing what kind of customer you’re even landing, and probably at a reduced price point. Offer a small price reduction or keep your prices steady for loyal customers. Creative solutions are the key to running your business in a recession, not price increases.