By Maria Valdez Haubrich
It seems all we’ve been hearing about the holiday shopping season is that consumers are crazy for deals. They’re using their smartphones to scope out the best prices, signing up for daily deals services to get special offers and even camping out at the mall on Thanksgiving to get discounts at dawn (or midnight, depending on the retailer). But there’s an equal and opposite phenomenon taking place as well, The Huffington Post Small Business recently reports: At the same time they’re craving deals, consumers are also willing to pay higher prices for products and services they value.
Big companies including Nike, Starbucks and McDonald’s have recently raised prices to compensate for the rising cost of materials—and so far, consumers seem willing to pay. If the trend continues, it will be sweet relief for retailers, restaurant owners and other businesses, which have seen the prices of raw materials, ingredients, packaging and shipping products rise in the past year.
The Huffington Post cites government data that consumer prices for food, travel and other goods have increased steadily this year. However, at the same time, consumer spending has also grown every month of 2011 except one when compared with the same months a year ago.
If you’ve been considering increasing prices, is now the time to do it? You may feel nervous about raising prices—after all, you’re not Starbucks or Nike, right? However, there are some common threads when it comes to products consumers are willing to pay more for.
Are they luxury items? Consumers typically don’t expect luxury products to offer price cuts (think Apple stores), so raising prices could actually increase the product’s value in your customers’ minds.
Are they “little treats”? Many consumers who are cutting corners on ongoing expenses like cable bills or buying store-brand groceries are still willing to splurge on small extras like gourmet coffee, manicures or other “little indulgences” that make all the cost-cutting bearable.
Are they essentials? If you truly offer something consumers can’t find elsewhere or can’t get along without, they’ll likely have to grin and bear a price increase. Just be careful you aren’t building resentment among your customers so that they’ll leave the minute they find a cheaper offer.
At the same time, keep in mind that while consumers are in a cost-cutting mind-set this holiday season, the holidays are also a time when everyone feels a little looser and more likely to indulge. Thus, shoppers The Huffington Post talked to were looking for deals, but willing to shell out $5 or more on a latte during their shopping search. In other words, if you can sneak in a price increase during a time when consumers are more likely to overlook it, you may just be able to get away with it.
Image by Flickr user Jim Legans Jr. (Creative Commons)
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Tags: small business marketing, small business sales
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