As the United States continues to experience higher inflation than recent historical norms, businesses must decide how to adjust pricing. Here are a three pricing strategies that are being deployed during inflation that you might want to consider.
Three Pricing Strategies During Inflation
#1 – Shrinkflation
Hear of shrinkflation yet? If not, you’ve probably experienced it without even knowing it. Shrinkflation is maintaining prices on a good while reducing the amount of good that a customer buys. This is seen with consumable goods like cereal, as noted in this NPR article.
This is a simple way to give a customer a sense of price stability while reducing the underlying costs to address increased business input prices. It is ideal for consumable goods like packaged foods. Yes, it is a bit devious, but it works.
#2 – New Models or Version
One of the best excuses for a price increase is a new version or model of the product. Customers are getting the “latest and greatest” version of your price at a premium. Just look at Apple’s iPhone price over time and tell me this strategy doesn’t work.
#3 – Just Raise the Price
What do food, gas, clothing, automobiles, and lodging all have in common? They are all more expensive as noted in this CNBC article. A lot of small businesses hesitate to raise prices, but the big businesses are not holding back. If a competitor has raised prices, don’t hesitate to follow. If your inventory, shipping, fulfillment, or labor costs are up, don’t hesitate to raise your prices.
For more details on the impacts of inflation on businesses in 2021 and why these pricing strategies during inflation matter, click here.