Cushion The Effects Of A Price Increase

How To Cushion The Effects Of A Price Increase



Picture yourself in product sales. You have just penetrated the market by offering a low introductory price, resulting to a minimal margin of profit.


Your product is doing fairly well due to its reasonable price. After several months, the increasing cost of production forces you to adjust the price by ten percent. You feel apprehensive about increasing the price for fear of losing your share of the market. What will you do?


Turn to your creative juices. Think how you can persuasively project your new price mark without fear of losing the market and without incurring the ire of the consumer.


Obviously, the way to do it will be to cushion the effects of the price increase. The cushion will minimize the pinch that the consumers will feel upon learning of the new price. The cushion will turn an angry loud howl to a merely surprised “Oh,” so to say.


Let us return to our original scenario. Your product has an introductory price of a hundred dollars that comes with free installation. To make it a hundred and ten may mean a diminished market share that you cannot allow to happen. Maintaining the price at a hundred dollars would mean a very negligible profit that will make it difficult to sustain the business.


You approach it by comparing your brand’s quality against your competitor. Your advantage is your price, which is cheaper by ten percent. Your competitor’s advantage is that their brand is better known than yours. The least attractive option is to go head to head against the competitor for it will spell immediate death for your product.


In this scenario, what is the best alternative?


One strategy to cushion the price increase is to use a little creativity and imagination. Adjust the price to a hundred and ten but at the same time offer a discount of ten dollars for a limited time.


Keep a low profile on the new price, while bringing in the loud drums and focusing advertising on the discounted offer. Your tactic is to attract attention on how the consumer will save and not on the new price.


Even if the new price is consciously obvious in the minds of the consumers, your discounted offer will likely attract their attention more. It is one way of increasing the price without making it too obvious. The discounted offer is a distraction. The offer is the cushion to the price increase. In effect, you have offered a grace period for the consumer to avail of the old price for a limited time. Introducing a discount or a rebate makes it possible to increase the volume of sales.


With a little creativity by way of tapping your persuasive talent and of course, a little patience, the fear of losing your market share is cushioned. Where you redirect the attention of the consumer helps to make your product stay in the market at a comfortable profit margin.


Creativity can make you succeed.