Story by Gabriela Stocco (Folha de São Paulo) – Interview with Romulo Pinheiro, partner at FALCONI
“Small businesspeople tend to believe that their brand is strong enough to support higher prices, but that is not always real”, says Romulo Pinheiro, partner at FALCONI, a consultancy company.
He highlights that, before increasing costs to consumers, other measures must be analyzed to close the company’s accounts, such as cutting costs.
Read below some tips to increase prices without driving clients away.
First of all, seek the control of your internal expenses. Increases are more welcomed if it becomes clear they are covering high raw material prices, for instance, instead of covering for the financial disorganization of your business.
Analyze if the brand is a valued element by target audiences when making their purchase, such as in the clothing segment, for instance. If purchases are based on price, such as the case for some food products, you may be replaced by another brand.
Although businesspeople wish to obtain large profit margins, it’s the market that, in practical terms, determines prices. Observe if your direct competitors are elevating their prices and what kind of profit margins they are working with.
Players in the B2B segment (sales from companies to other companies) must notify increases beforehand. Base your price adjustments with concrete data, as these clients have more information on the market.
Text published on 8/31/2015 in Folha de S. Paulo.