Recession is over(?) - Shrink your candy bar
The recession is over. Even if it isn't, inflation is starting to grow. Either way, you are likely wondering how you're going to raise prices. One truth of pricing is that customers HATE price increases. We hate them both as consumers and as businesspeople who now have to find a way to pass them on, or make less profit. How can you make up for your increased costs while minimizing the negative impact on your customers? Shrink your candy bar. “Inflation makes balloons larger and candy bars smaller” said David L. Kurtz, business author. Likely you've noticed or heard about how candy manufacturers handle this situation. When costs increase, instead of raising the price of the candy bar, they simply shrink how much candy bar you receive. They don't change the package size, and the only real change on the label is the new net weight. I'd like to tell you the story of how when I was a kid we'd ride our bikes down to the apothecary and spend a quarter on a candy bar. Then one day, seemingly just like any other, I arrived with my quarter in hand, starving for a Snickers bar. I purchased one, gobbled it down, but was still hungry. They gave me less Snickers in my bar. I was upset! I had been cheated!!! I stormed up to the counter guy and screamed "WHERE IS THE REST OF MY SNICKERS BAR?" ... I said I'd like to tell you this story but you see it isn't true. Throughout my entire childhood I bought Snicker's for a quarter and never noticed that they continued to shrink the candy bar. And that's the point. I never noticed. And neither will many or most of your customers. By shrinking the candy bar, we don't notice the change as much as we would if they had simply raised the price. What does this mean for you? Is there something you can do to lower your costs that your customers are likely to not notice or care a lot about. You can even de-bundle the feature or service and offer it as an option the way the airlines have de-bundled checked baggage service. If you currently offer free shipping, can you de-bundle that? Can you slow down the speed of your free shipping to save some costs? Undoubtedly you've known about shrinking candy bars before this blog, but have you ever thought about how to apply this concept to your business? Now is the time. Good ideas won't come easy so you'll have to think. Then again, nothing worthwhile is ever easy. This is but one tactic to raise prices without really raising prices. More to follow.
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