“Yesterday’s price is not today’s price” is often tossed around, especially among SMEs. It is important to remember that price changes aren’t a flex; neither are they about following trends but about the value and necessity of a product or service. While external factors like currency fluctuations and rising transportation costs do affect prices, business owners need to be cautious when applying this mantra to their pricing decisions.
Indeed, most goods in Africa are imported, which means they’re subject to shifts in exchange rates. When the dollar and fuel prices rise, the cost of goods inevitably follows suit. As a result, it’s tempting to pass these increased costs onto the final customers. However, it’s essential to recognize the ripple effect on customers’ purchasing power.
Customers are particularly price-sensitive and value-conscious. Sudden price hikes can be perceived as a rip off and can drive them to totally boycott a business or cut down on their expenses; which means losing existing customers and struggling to attract new ones.
Here are ways to navigate these challenges to avoid losing your existing customers:
- Communicate openly the reasons behind the adjustments instead of surprising customers with sudden price increases. Going to extra mile to communicate prices changes shows empathy towards your customers can build understanding towards the situation.
- Explore flexible pricing structures that align with your customers’ needs and buying habits. Offer bundled discounts to incentivize repeat purchases and reward loyalty to ease the strain of the current situation.
- Never stop emphasizing the quality and the uniqueness of your products or services to justify their price points. Highlighting taste, durability, reliability, or any other excellent features of your product or services can build confidence in customers and explain any changes in pricing.
- Be flexible with delivery and pickup options. Establish partnerships with logistics companies to tackle the challenges together. Some logistics companies still offer affordable rates for both interstate and intrastate deliveries. Take the time to research these options and establish partnerships, or explore the possibility of allowing customers to arrange their own pickups to optimize efficiency.
- Stay connected with your customer base through feedback channels, and community-building initiatives, while staying committed to delivering value.
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