ARMONK, N.Y. — In my last article, I offered examples of necessary price hikes at a fictitious store. Some of you may have thought that these hikes were too severe.
I have implemented comparable price hikes at my stores, and they came off without a hitch. When I execute any price change, I do three things:
The best tip I have about raising prices involves the washer coin-drop mechanisms. Some manufacturers have the “number of quarters” displayed on the drop-coin mechanism. I have changed all of my washer digital coin mechanisms to read, “Number of Quarters to Start.” OK, this is a little smoke and mirrors, but quickly now, how many dollars is 29 quarters? What about 23 quarters? Most customers will realize that the price has gone up because it will cost a little more to do their laundry. But it’s only a couple of quarters. Everyone can spare a couple of quarters.
By increasing the vend price from 17 quarters to 19 quarters, it’s only two more quarters. We might drop that amount in the Dunkin Donuts’ tip jar. Change in our pocket is not “real money.” When we open our wallet, that’s where the real money is. Increasing the vend price from 17 quarters to 19 quarters isn’t as significant as raising the vend price half a dollar. Half a dollar is “real” money!
All the digital-drop coin mechanisms can be converted to “Number of Quarters to Start.” Just change the “amount per coin to 1 and the “amount to start” to the number of quarters, and away you go. You must also place a label right next to the drop-coin unit that reads, “Number of Quarters to Start” both in English and Spanish.
Once you have implemented your price increase, you need to go back and visit the competition and let them know about your price increase. This is key. You may discover that your competitor has been waiting for you to raise prices. He may also raise prices. If not, then you ride the wave and take a look at your profitability in eight weeks. Even if you lose business, you may find that you are now more profitable. Fewer customers mean reduced utility costs, fewer repairs, and less wear and tear on your equipment and store.
One of the side benefits of being the highest priced store is the higher quality of customer you attract. I have always found that the people who patronize the cheapest stores are the customers who have the least amount of respect for the store. Low respect for your store means little or no respect for keeping your store clean. These customers will yell the loudest and complain the most. We should enjoy visiting our store without being harassed. Send those “bottom feeders” to your competition.
Please e-mail me (firstname.lastname@example.org) and let me know how your price increases work out. I would love to hear about your challenges and other winning pricing strategies.