Today’s popular pricing advice: “Decrease your prices and gain share.If your prices are the lowest on the market, you can beat your competitors, build up your customer base, and raise prices later.” This is terrible advice. The strategy leaves you broke. No money for sales or marketing. No money for R&D. No money to go after new customers. You’re stuck. A Better Solution: Raise prices methodically, carefully, regularly. How to Raise Prices Responsibly in 3 Steps 1. Align Prices with Value by Segment Start by splitting up your transactions into small groups, defining them by buying situation and customer. Then define the main value propositions for each transaction type/group. Build prices with the following formula for these transaction types: Price = Cost + $Value Prop 1 + $Value Prop 2 + $Value Prop 3 Build prices with the following formula for these transaction types: Price = Cost + $Value Prop 1 + $Value Prop 2 + $Value Prop 3 Worried your value propositions don’t give you an edge? Consider adding a low-cost value driver to your deals. 2. Give your customers the notice they deserve Don’t just announce a price increase out of the blue. Give your customers plenty of notice first. Make the price change even easier on them by taking it slow. A 1% price increase results in an 11% profit increase on average. If this still feels like too much, go a ½% at a time. 3. Sell on value. Always. During the sales process, listing product and service features won’t get you very far. Instead sell on benefits, on the value customers receive. When breaking the news of a price increase, always put it in terms of added value for the customer. Does your product and/or service save customers time? Sell efficiency. Does it make their processes easier? Sell productivity and fewer headaches. Does it make one segment of customers more money? Sell the economic benefit. Stop Lowering Your Prices to Achieve Success. Raise Them Instead. Automate a huge part of this process by putting your sales and pricing data to work. KiniMetrix helps companies determine the most profitable and successful prices for each transaction. Assess how your value propositions resonate across customer segments using the software. Evaluate how your price increases affect margins.