Yes, they did it again, they raised the price of my grande coffee $ .15
Hey, they didn’t go up a nickel or even a dime. They increased it by $ .15.
The amount got me thinking about a basic principle of raising a price that I talk about in my book, High-Profit Selling: Win the Sale Without Compromising on Price.
The principle is if you’re going to increase your price, take it all and take it at one time. Don’t dink around and take a minimal amount. Your customers simply aren’t going to appreciate when you come back months later and ask for another increase, all because your first one simply wasn’t enough.
Let’s look at the Starbucks increase. Did I notice it? Yes, but after paying it a couple of times, it is no longer an issue in my mind.
If they had decided to increase it a nickel, I might not have noticed it but even if I had, my feeling would be the same. Gee, there goes Starbucks increasing their prices again.
Increasing my coffee by $ .15 allows them to not have to come back anytime soon and do it again. The beauty is it’s a one-time hurdle for them to jump, and after they’ve jumped it, they get to keep all of the increased revenue.
Do they risk losing some sales with the increase?
Sure they do, but the increase in their variable profit with those that still buy will more than offset the minimal loss from those who choose not to buy.
The other way Starbucks covers themselves is by giving the customer options.
I may always order the grande, but if I’m upset with the price, I could always go with a smaller size. Yes, it’s still at a higher price, but I come away feeling I’ve been able to manage the increase.
What is the learning we can take away?
When it’s time to take an increase, push the upper limits — while at the same time providing your customer with options.
Copyright 2014, Mark Hunter “The Sales Hunter.” Sales Motivation Blog. Mark Hunter is the author of High-Profit Selling: Win the Sale Without Compromising on Price.