Raising prices for a product or service is challenging. One strategy is to keep the headline price but simply offer a cheaper product — fewer chips in the bag, fewer deliverables in the sponsorship package.
But what happens when you so misfired from the get go that you can’t sneak in a change? Or, what if your product or service has simply gotten far better and more competitive?
I’ve heard lots of advice on how founders and early stage companies often start off by charging too little and need to try to maximize their ask early on. Too bad I didn’t know that starting Technical.ly — because our business team still struggles with the legacy of our pricing strategy from our founding, some six years ago.
Even though the products and services we offer — event sponsorships, sponsored content and other activations — have become far more professional and deliverable-focused (not to mention increases in costs to produce), there has always been resistance to our stretching our prices — which, we always remind, supports our mission of covering and convening our local tech communities.
(We consistently find ourselves a cheap offering compared to other events businesses but we’ve done a better job of hitting the right price point for sponsored content and other new products.)
Back in May, I was on a podcast about leadership strategy and I spoke a bit about this challenge. In that conversation, I said that at Technical.ly (particularly in our older Philadelphia and Baltimore markets), we have three kinds of customer reactions to price growth:
- Those who were priced out — I’m not willing to spend more on what I bought last year, even though you’re telling me how the product has changed or grown.
- Those who grumble we’re always too expensive — I’m doing you a favor by going ahead with this but I’m going to expect something in return or keep pushing to ultimately make that price growth of questionable value.
- Our best customers who grow with us. — I want to challenge you to make sure I am indeed getting better service or a better product but I understand you are offering me a better experience.
We’ve talked about different approaches we could take.
We could have just made a major jump one year to face the pain but also correct ourselves to be more in line with peers — though it’s an approach that municipal tax relief cautiously avoids.
Alternately we strive to try to move as many of the second group into the third as we can, letting the rest of the second group fall into the third. The second group is likely the one we least want but as we build out revenue, we’re simply scared to lose that group.
Many fawn about firing customers. One sign of our growth has been that we have done this. But we don’t do it with all. Our pricing strategy is one of the clearest battle grounds to do that.