Be Ready to Explain Price Increases

These days, most customers are especially sensitive to increases in prices for items they regularly buy. Sometimes customers accept the price increases and move on. In other cases, the customers get upset. According to researchers at University of Arizona, Arizona State University, and University of Pennsylvania, the root of the upset is a desire—conscious or subconscious—to punish the retailer. How else to explain a shopper leaving behind a full cart and walking out the door?
     What leads to a customer wanting to punish the retailer instead of accepting a price increase?

• Does the customer consider the item to be a necessity? If they believe they must have the item, then even if they can manage to afford the extra charge, they tend to feel trapped when they see a price increase. The answer? When raising prices on items that many customers will see as necessities, use signage to describe less expensive alternatives. Prepare your sales staff to point out the alternatives if a customer complains about a price.
• Is the price increase a surprise? Consider warning customers of upcoming price increases. There's certainly the risk they'll then start looking for other sources for the products they've been purchasing from you. But there's also the opportunity for you to boost sales and book profits sooner if customers decide to stock up before the cost rises.
• Does the price increase seem unjustified? Have your staff ready to answer questions about pricing. If a customer says, "Why is the price so high?," the salesperson might say something like, "When our suppliers increase their prices to us, we need to pass those increases on to the customer so that we can stay in business and continue to both serve shoppers like you and employee the people like me."