Mickey D’s raised the price of a cheeseburger 19 cents in December, or at least that is what Fortune Magazine tells me. I can’t say that I eat often enough at McDonald’s to notice (but I am a fan of their $1 iced tea).
At a time when everyone else is worried about losing customers, can they really afford to raise prices and risk irking their customers? Apparently so. While McDonald’s stock hasn’t done so well since the first of the year (NYSE: MCD), they were reported to be one of the only Dow stocks last year to hold their value. Contribute that feat to the fact that consumers still want to eat out, just don’t want to spend as much doing it and now you know why they can afford to raise the price of cheeseburgers. (Have you seen the price of cheeseburgers at Ruby Tuesday’s and other casual dining establishments?)
So how does this price raising success story benefit your business? Well it depends.
Government employees and Fortune 500 workers would be appalled not to receive at least a cost of living increase each year along with their annual merit raise but the sad reality for the rest of us is that increases of any kind only come when the business makes more money. To make more money we’ve pretty much got to sell more or raise our prices. But can you truly afford to increase prices at a time when today’s Atlanta Business Chronicle notes that businesses across Georgia are reducing or postponing their capital expenses until better times? Depends on what you are selling.
We don’t have to go back to Kotler to recall that part of marketing your services is setting a price that truly represents the value of your offerings. Price too low and the value is perceived as cheap or less durable (think WalMart) and price too high and you place things out of reach (think Maserati Qattroporte). You’ve got to price just right for your particular audience or customer base, sometimes even offering different prices for different customers.
As demand for services increases and quite possibly the cost of delivering services increases sometimes it makes sense to raise the price. There are still businesses making money and some even thriving in this economy. If yours is one of them then God bless you. But if it means you have to charge more to maintain the same level of quality in your product or service that brought you the success that you already have then perhaps you, too, like Mickey-D’s, should beraising your prices.