Fairness is key to setting new prices

4/26/2011

There comes a time in the life of every business where it needs to expand. This is best done by raising the end price of their products and services, thereby increasing the profit generated through each sale.

As the New York Times suggests, price isn't always the big issue that most entrepreneurs make it out to be. If consumers feel a price hike is justified, they will often still shop at the small business - after all, customers stick with a brand for a multitude of reasons and price is only one factor.

"I learned it's a misconception that if you raise prices too much, you'll have no business," Mark Kronenberg, founder of tutoring company Math 1-2-3, told the paper. "There are many customers who shop based on quality, not lowest price."

Mike Faith, owner of a headset retailer, agrees with Kronenberg. When he once raised his prices by 10 percent, his revenue increased by the same number, showing sales consistency before and after the price hike.

According to an Office Depot survey, 67 percent of entrepreneurs plan to raise their prices and profits this year, so they should keep this information in mind.