Setting prices is tough enough.
Deciding what to do after you set them, well… that’s difficult. Why change your price if it’s working?
And, if it’s not working, what if changing your price damages revenue even further?
This is an important—if stressful—conversation, but don’t worry, we’re here to help.
Here are a couple reasons you should consider raising your prices. This applies whether you’re selling a product or a service:
- Higher prices = higher perceived value for the same product. In a Stanford study, groups of people were served the same wine. Only one group was told it was expensive, while the others were told it was cheap. The expensive group enjoyed the wine more. Believe it or not, a higher price can both increase the perceived value of your product and increase your customers’ enjoyment of it.
- Higher prices increase margins without extra labor cost. Most levers for increasing revenue—like new advertising campaigns or conversion rate optimization—require work on your end. But raising prices increases your margins without you having to do so much as lift a finger.
- Higher prices tend to attract better customers. In our experience, raising your prices can also increase the quality of your customers. People paying more money typically ask fewer questions and are easier to deal with. By raising prices, you eliminate people who are ruthlessly frugal.
So should you raise your prices? We’re saying you should think about it.
Of course, you want to find the point at which you can maximize revenue, which might take some experimenting.
But there are intangibles to raising prices—like attracting higher-quality customers—that will benefit you no matter what.