Unpopular eCommerce opinion: Raising your prices might be a smart move

Here's an unpopular way you can roll with the inflation punches: 

Raise your prices.

Now, before you throw up your fists and declare us as part of the problem, hear me out: 

Discount pricing as a “strategy” was bound to come crashing down around us. 

It's inherently unsustainable. 

You can only go so cheap before you need to use questionable practices in production to be considered a profitable business. There’s no such thing as low-cost production anymore. So, if you’re doing everything in your power to keep costs down without really focusing on the value you want to offer to the world, or the brand you’re building, you’re doing things the wrong way around.

It’s time to do things differently. 

eCommerce and retail as a whole are heading into a tricky period with increasing production and transportation costs. But that is no reason to throw in the towel. Challenge often brings opportunity and inflation is no different. Some of the best brands in the world have been born or grown in a recession. 

So, here’s what I think (and this is coming from the guy who’s lived and grown businesses through an economic crisis or two):

Raising prices to meet rising costs is one option with high integrity when done right (and for the right reasons).

The catch is you can’t simply raise your prices overnight. 

Instead of asking the question: “how do I increase prices?” ask the question, “how do I increase VALUE?” 

Increasing value is what we’re really talking about here. If you are finding your brand is in a crunch because costs are increasing, you likely do need to increase your prices, but only focusing on the exchange where you receive something isn’t going to get you very far. You have to think about, and take a deep look into, what you’re giving in exchange for that increased investment from your customers. In short, you need to increase value in order to increase your prices successfully. Are you prepared to do that? 

Well, if the answer is no. We’re here to help.

Here are the 5 key things you need to consider if you want to be seen as more of a premium product and raise your prices: 

1) Brand

Ask yourself - What does your brand say about you? Have you been focussed on selling products versus building a brand? Your brand is the most important part of this entire conversation. If your focus in your business to date has been more about selling products versus building a brand, relationships or community, it's where you should look first when it comes to raising your prices. Premium products – in any industry – all have one thing in common: great branding, great storytelling. They’re selling more than a product. They’re selling a lifestyle, and in turn, What they’re selling has a higher value.

Remember: Great brands don’t compete on price, they compete on value.‍

2) Customers

Do you know how to speak to the things that are at the top of your ideal audience's mind? Do you know how to communicate that you can solve those problems? If you don’t, you won’t win the value conversation. You won’t know what things to talk about in your communications and your messaging will fall flat. If you don’t understand your customers intimately and know exactly how to talk about the things they care about, it's something you need to learn quick.

3) Mindset

Is your brand attached to a story that your audience won’t invest a premium in? Do you perhaps believe that there’s a limit to your pricing strategy?

Of course, you need to consider a smart pricing strategy based on real market data. But, if there’s evidence that there’s an audience for a better, premium product (which there likely is), why can’t you be the one to provide it? There’s often no other obstacle to increasing the perceived value of your brand and selling higher value, premium products than the obstacle you imagine. There’s absolutely no reason why you can’t compete with the premium and biggest players in your niche, you just have to be creative enough and smart enough to do it better. 

4) Product suite

Does increasing prices or learning how to sell higher priced products mean you have to stop selling lower priced products?

No.

Diversification of your product suite and introducing a better story, brand, and communications strategy will only help you to sell the lower priced items, too. You don’t want to confuse your audience by suddenly changing your entire product suite overnight. There’s a careful and intentional way to being seen as a more premium brand.

5) Messaging

eCommerce is changing. Consumers are changing. The way we buy and use products is changing.

Revisiting your core messaging strategy to meet people where they are and helping people to really believe in the value of your brand is smart business. Your core messages and taglines don’t need to stay the same for the lifetime of your business. They may be similar, but evolve with you and your audience over time. You might add new core messaging depending on what products you begin to offer and how your audience reacts to it. You may simply revisit your messaging whenever there are big changes happening in the world (like now) but either way, you should always be looking at how you communicate the core message of your brand. When your goal is to be seen as more of a premium, this is even more important.

Increasing your prices as a potential growth strategy isn’t for everyone, but it COULD be a good way to combat increasing costs for you and your brand and it could be the smartest way for you to stay relevant in an ever-increasing market.If you’re not sure about your next moves and you’re starting to think about your strategy for growth in 2023 and beyond, let’s talk.