Raising prices again - New products
As I've said here several times now, customers hate price increases. However, as pointed out to me several times this past week, customers only hate price increases they know about. One example is the price of toothpaste. If the price of toothpaste goes up from $2.49 to $2.69, does anybody notice? It's likely that customers purchase toothpaste infrequently enough that they don't remember what they last paid. Therefore, they probably wouldn't notice the price increase. The shrinking candy bar was an example of something you may be able to do to "hide" your price increases. If customers don't notice the change in size, they won't notice the price increase. Another technique, similar to the shrinking candy bar, is to change your product and your price at the same time. Chris Hopf of Pricing Wire pointed out that Odwalla just changed their packaging. They went from a 15.2 oz package to a new eco-friendly 12 oz package, a 21% decrease in package size. Simultaneously they lowered their price from $3.29 to $2.99, only a 9% decrease in price. They went from $.216/oz to $.249/oz, a 15% per oz price increase. To be fair, the Odwalla Tweet site confirms that they changed the package and lowered the price to the channel. The actual end price is set by the retailer. Regardless of who gets credit. The price to the consumer just went up 15%, but will probably never be noticed. And that is the point. The price increase will never be noticed. Customers do not hate price increases they don't detect. What can you do? Can you change your product and your price simultaneously to "hide" any price increases? Besides size, you could create higher or lower quality products, or add or subtract features. Changing the product and price at the same time obfuscates any intended price increases. Please send me any recent examples you find.
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