Business in Virtual Worlds

Now Is a Good Time to Raise Prices Says New York Times

I couldn’t help sputtering a little bit at this one, not because I necessarily disagree, but because in the wrong hands this kind of advice can be dangerous. I mean, take these quotes out of context and what have you got?

From the New York Times:
“…most business are facing rising costs, especially if they purchase commodities. That, she says, gives them “every right to pass along these increases” to their customers.”

On how much value you deliver:

““Prices don’t exist in a vacuum. Like the earth under your feet, a price is supported by the value the customer perceives in the product or service to which the price is attached. Thinking about price and value in this way makes it clear that this is at least a two-dimensional problem. That is, you can change the pricing and leave the value alone, or you can change the value and leave the pricing alone.”

Food companies are the perfect example of this. They often leave the price unchanged, but give you less. Coffee used to be sold in 16-ounce containers but is now sold in 13-ounce cans at the price companies used to charge for a full pound. “

On hedging your bets:

“If you are going to raise your prices, set them higher than you have to, suggests Karen E. Klein, writing on That way, if your customers balk, you can reduce the price increase a bit and still end up with the increase you need.”

On hating your clients:

“Hesh Reinfeld suggests that if you want to get more from your marketing spending, learn to hate your customers.

Mr. Reinfeld said he found that for every hour of billable work, he and his staff spent another, nonbillable hour talking to clients they liked about their children or playing golf.

“These people made great potential friends but terrible clients,” he says. “I usually lost money on each one of those consulting contracts. On the other hand, when I despised a client, I’d do the work, and then get out of his office.

But finally, a note of caution: increase marketing spends!

“By increasing spending when your competitors are cutting back on theirs, you will have a chance to increase market share and be much better positioned to be profitable when the downturn ends.”

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