When prices go up, tell the truth

by Sue Pitts on February 10, 2009

For the last nine years, my business purchased a spot on a search engine-type Website to help potential customers find us. In the first few years, this site drove the bulk of our customers to us. With advances in search technology, we see fewer and fewer guests finding us through this site.

Just as we were fine-tuning our marketing strategies for this year, we received notice that our annual membership fee was due and that we could renew it online. I went to the site and was shocked to find my annual fee had more than doubled – with no prior notice or explanation.

On its Website, the company’s copywriters were proud to tell us that we would now be billed monthly instead of annually, couching that news as “we listened to what you wanted and now you can pay monthly.” Nowhere was the annual fee listed. Not being a math genius, I took out my calculator and figured out what our new annual fee would be. Then I sent an e-mail to my contact person and asked why the company would double their fees in this economy when we own a business that caters to leisure travelers.

Things quickly went from bad to worse. The reply from my contact person said that I should call her and she would be happy to help me write a marketing plan. She never addressed my question, didn’t point to new or expanded services that justify the price increase, didn’t even tell me that everybody’s hurting and they’re no exception.

Just so you know, I help small business owners write marketing plans. I have a tremendous amount of experience writing marketing plans. I’ve helped keep the doors of my business open post 9/11 and through two recessions. I know a little something about marketing.

The moral of this story is simple. If you find that you have to raise your prices, an incremental increase sits better with customers than a huge jump. If you can’t avoid a dramatic increase in prices, warn your customers that it’s coming and share with them some of the reasons for it. Don’t try to hide it by changing your billing cycle. Consumers are smarter than that.

Our customers know times are tough; they probably understand that freight charges or manufacturing costs or staffing needs or other factors outside your control drive up costs.

Be as open as you can before you raise your prices. And if you get a customer who questions the increase, be as straightforward as possible in your response. You might just keep that customer. This company lost my business. I even wrote a follow-up e-mail to tell them so.

They haven’t responded.

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