Pricing During Inflation - What you need to know
What impact does an inflation have on your pricing strategy? Tune in below to find out!
Auto-Generated Transcript:
0:01
hello everyone and welcome to the pricing for associations podcast where we give away all of
0:07
our knowledge on pricing and value strategy for your Association I'm Dr Michael tatsanetti I'm a
0:13
certified Association executive and a certified pricing professional and I'm the founder and CEO
0:19
at pricingforassociations.com where we guide associations just like yours forward in their
0:25
pricing and value strategy so today I'm answering a question from an association Pro if you have a
0:30
question and you'd like for me to answer it on a future episode of the podcast just head to
0:35
pricingforassociations.com forward slash podcast and you can submit your question there and I will
0:42
be sure to answer it in the coming weeks please remember that as I answer this question this is
0:47
general advice it is not specific Consulting recommendations so take what we share as a
0:53
learning opportunity not necessarily the exact path forward for your organization okay all right
0:59
so today's question is is how do we price during inflation should we be raising our prices and so
1:06
how do we communicate this to our audience this is a phenomenal question currently as I'm recording
1:13
this it is February of 2023 and we have been going through uh inflation for the past year and
1:20
we know that this is a normal thing we're not even going to make it political on this podcast we have
1:25
recessions inflation all of these things kind of come and go about every decade it's just a normal
1:30
part of economics and how our country operates so with that how do we respond whether it's right
1:37
now in 2023 or if you happen to be listening to this in the future and we're dealing with
1:42
it at another time so here's what I have to say I have a few things to say about pricing during
1:47
inflation and how to operate the first thing is I do not believe in automatically raising
1:55
your price because we are in an inflammatory period where we have inflation now that might
2:01
sound controversial it's hey our costs are up and inflation is up you know 9 or 10 or 11 over the
2:08
past year I get that but if you actually look by industry there are certain industries where it's
2:14
up way more there are certain ones where it's not up that high that is an average so what we've been
2:21
seeing over 2022 and in 2023 so far is things like Airlines uh uh so so traveling on airlines uh gas
2:31
um things like that are all of about 30 40 percent but things like education which is a lot of what
2:36
associations do is only up about one two three percent so we can't first of all just take
2:42
the nine percent or ten percent and say we're just going to increase our price by 10 percent
2:47
now we do need to look at our costs our costs going up so things like an event therefore right
2:52
pulling off an event is going to cost more money shipping is going to cost more money
2:57
um uh uh traveling to the conference but it's also going to cost more for your attendees to get
3:02
there and your speakers and your sponsors to get there so do you you know put all that into your uh
3:09
events registration fee knowing that they have other costs that are astronomically higher the
3:14
other thing that I like to say is are you likewise going to lower your price when we're in a time of
3:21
um of of economic downturn where maybe we are in a recession and the costs of things goes
3:27
down are you going to reduce your price probably not at best during let's say covid for example
3:33
which was different that was a global pandemic you probably tried to give away some things for free
3:38
with digital education we couldn't meet in person but if we could have you wouldn't have given that
3:43
away for free because you have real costs of putting on an event so with that here is what I
3:48
do recommend this is what I think we should do I think we need to be doing value-based pricing so
3:53
we don't price based on inflation recession you know good times bad times in our economy that is
4:00
a consideration of what is your um what I would call your pricing floor meaning the lowest that
4:06
you would price you need to have enough to cover your direct costs indirect costs fixed costs
4:11
variable costs right we're going back to CAE study group days for those of you who are also a CAE
4:18
we have to understand those costs and make sure that we're making money but when we price based
4:23
on the value that's given and the transformation that allows us to justify the price even more so
4:29
instead of going to our members and saying hey you know inflation's hitting all of us so we're
4:34
just going to go up 10 your your you know uh five thousand dollar a year corporate or organizational
4:40
membership is now fifty five hundred dollars that's not going to sit well you're probably
4:45
going to have a retention issue you might you know uh you know end up having a long-term issue there
4:51
what is better is to say hey um we've added value again whether it's you know we're now
4:57
recording these things at the live event and we're putting them into a portal for members
5:01
only so if you missed the live event we're going to trickle out a couple of the talks and that's
5:06
available in the member portal uh uh you know for 30 days at a time and we're going to put out a new
5:12
talk every month so you're gonna get 12 talks a year if you couldn't make it to the conference
5:17
and in addition to that inflation's hitting us so we're you know going here but the point is Anchor
5:23
it more on value not on inflation now again I know that's like the knee-jerk reaction but I
5:29
promise that you know during covet a lot of people just didn't knee-jerk things they gave a lot of
5:34
things away for free and then I was saying don't do that and then people had a hard time recovering
5:39
from that in the one two and three years now post covid well really two years post covet
5:46
um so I'm saying that to say trust me when I say don't just increase based on inflation because
5:52
likewise I think some people are going to end up having issues where their bottom line is
5:56
very negatively impacted so hopefully that helps answer focus on value focus on what can you add
6:02
in what can you enhance it may not be something brand new could you enhance could you give more
6:07
time for something could you do more resources for something to also help justify the price increase
6:12
you know I've never gotten a letter from Netflix Hulu um Starbucks um my my any anything saying
6:21
we're raising your price because of inflation what they say is we've added programming we've
6:25
added value we're adding new things to our menu or we're increasing the benefits for employees
6:31
it's it's all value driven and then they raise the price so with that focus on value if you
6:37
don't know how to do that we're here to help so of course you can always reach out to us
6:42
um if you are first of all thank you for joining us and I hope that you found this content valuable
6:48
um if you are looking for more content specifically on pricing and value strategy for
6:52
associations you can follow along on our YouTube channel which is pricing for associations our blog
6:58
pricing for associations.com forward slash blog or on LinkedIn also again if you'd like to submit
7:05
a question feel free to do that at pricing for associations.com forward slash podcast and until
7:10
next time we look forward to delivering Great Value great free educational content if you'd
7:15
like to set up a sales call with us to discuss your pricing and value needs if you don't know
7:20
how to communicate based on the value we're here to help you connect to pricingforassociations.com
7:25
forward slash contact and we will set up a sales call with you in the next couple of weeks so that
7:30
we can help your Association out continue to have a great day and thank you for joining us
