Jan 3

With the start of a new year, many businesses will decide to raise their prices. Sometimes, this significant step may be taken without any real logic or research behind the decision. This scenario is fueled by the fact that many are expecting the economic recovery to start in 2011. I caution businesses from doing this.

Optimism or a gut feeling doesn’t create demand. Price considerations should closely match actual demand for your products and services. In addition, significant competitive analysis should take place before implementing price increases.

Here are some reasons why raising prices at the beginning of the year is risky.

1) Many businesses are in the shopping mode in January because they are hoping to implement new initiatives. Don’t force them to add your products or services on the shopping list due to a price increase.

2) Raising prices is a great way to alienate your existing customers. Remember, these are the same customers that have helped you ride out the last few turbulent years.

3) The practiced logic of raising prices on the calender year is ridiculous. This action does not serve anyone except the accountants who wish to keep things in neat order.

Don’t over step your own confidence about your business, the industry and the marketplace by raising prices abruptly. When it comes to raising prices, the cart does not come before the horse.

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