Price Increase via Package Change

Customers hate price increases. So many companies keep the price the same, but reduce the amount of product sold. I recently came across an example of this when my wife came from the grocery store with a big container of Tropicana Orange Juice touting a “new, easy-pour” design. As a pricing person, my first thought was “must be a smaller package.” Sure enough, they had taken the size from 96 to 89oz. A couple of days later, the LA Times ran “On store shelves, stealthy shrinking of containers keeps prices from rising.” While the article mentions a lot of upset consumers, companies often have no good alternatives. Raising prices leads to even more customer ire, and rising costs have made the current package unprofitable. What often irks people is the way companies try to pass along price increases without anyone noticing, rather than just saying “costs are going through the roof, we have to do something.”

This technique is most popular in the consumer packaged goods industry, but it can also apply in B2B settings. Rather than trying to force customers into solutions that are beyond their budget, think about what can be unbundled to lower your costs and make your solutions affordable to your customers. The ones who actually value the bundled services will still purchase them. This is different than a consumer product that only comes in fixed sizes.

Do customers only typically use 6 hours of their 10 hour support package? What would happen if you gave them 6 hours at a commensurately lower price? And positioned it as a way to help your customers save money? Sure, you would lose some short term revenue, but then you have a good story when it comes to charging customers who go over their allotment. Of course, it’s helpful if you can isolate which factors influence demand for particular customer segments.

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