June 02, 2014
Raise Prices (and Tame Backlash) with the Right Messaging
Raising prices is a sensitive issue – no one enjoys paying more. But with the economy in an upswing, many companies are contemplating it, making managers rightfully anxious. However, the right messaging tactics can help tame a potential backlash. Just take a page from Amazon, which hiked up the price of Prime a couple months ago.
(1) Float a scarier number.
Amazon initially hinted it was contemplating a $20 to $40 increase. When it announced "only" a $20 boost, customers sighed with relief.
(2) Appeal to fairness.
Amazon clearly noted it that it had not raised Prime's price since its inception nine years ago. That's a long time. And it seems fair enough.
(3)Hint that there's more to come.
There has been a lot of talk about Amazon adding streaming radio to its Prime package. Additional features can make customers more receptive to a deal.
Adapted from “ The Art of Raising Prices: Lessons from Amazon Prime” by Rafi Mohammed.
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