When Is It Time to Raise Your Prices?

Sometimes when running a small business, we need to remind ourselves: it’s a business, not a charity.

If you follow me on social media, you see me talking quite frequently about charity and giving back. I truly believe its an important aspect of life. BUT, when it comes to running a business, you need to focus on the bottom line. Leading me to an important question:

When Is It Time to Raise Your Prices?

Netflix has just raised its prices. Netflix has become ingrained in our culture after rebounding from a troubling past in a BIG way. Now, they steal the stage at award shows, showcase feature films and feature BIG TIME stars. Perhaps the most integral piece of their comeback puzzle has been their meme-ability (cough, cough Bird Box)

“did you see my text”

me: pic.twitter.com/ITtD3Z9a9M

— (@boujeesIut) December 25, 2018

So, why now? Well, Netflix has an extremely popular offering and they know that raising their prices $2 here and $3 there won’t lose them many members. They also know this change will bring in big revenue.

To say it plainly: people are hooked on Netflix– and few (if any) will leave just because of a price increase.

So, what’s the lesson?

When you offer a GREAT service its OK to raise prices a reasonable rate.
Since they have such a strong brand. Customers are less likely to leave.
Branding matters, and when done well, a brand can become a part of people’s lives. (think Apple, Google, and more)

Before raising your own prices its important to know: Are your prices set at the right rate?

As Netflix continues to grow their offering and showcasing more branded content, they are able to charge a higher premium.

To decide if your product or service is aptly priced ask yourself these questions:

When you think about your ideal customer their budget, how does your product/service work into their life?
Do you have a loyal group of followers (either on social or otherwise)?
Do your followers recommend your product and feature it on their social services?
Are you making a profit from the revenue produces by your product?
Are you offering a valuable product or a luxury product?

When your customers pay more for your product or service– they are expecting more. Consider your brand positioning.

Are you Walmart or Mercedes? Do you provide low prices accessible to all, or are you a luxury item accessible to only those with money to spare?

As Seth Godin writes,

The goal, no matter what you sell, is to be seen as irreplaceable, essential and priceless. If you are all three, then you have pricing power. When the price charged is up to you, when you have the power to set the price, there is a line out the door and you can use pricing as a signaling mechanism

Netflix has definitely accomplished this. They are irreplaceable, and essential to many people’s lifestyle. They have millions and millions wrapped around their finger.

So, do you have an irreplaceable product your users will gladly pay more for? Or is it time to rethink your current pricing?

When Is It Time to Raise Your Prices?

Sometimes when running a small business, we need to remind ourselves: it’s a business, not a charity.

When Is It Time to Raise Your Prices?

To say it plainly: people are hooked on Netflix– and few (if any) will leave just because of a price increase.

Before raising your own prices its important to know: Are your prices set at the right rate?

When your customers pay more for your product or service– they are expecting more. Consider your brand positioning.

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