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Kolapo Imam
Product Specialist
Asked a question 2 years ago

If a business is struggling to make money, should they raise their prices to increase profits, or lower prices to attract more customers?

Silvia Frucci
Neither, I will re-structure the whole pricing. In my experience is always about customer behaviour, once you find the buying pattern (or the lost reason) you can start reviewing the pricing
Godspower Eseurhobo
You might consider price reduction if you offer more or similar value to your competition who owns a better percentage of the market shares.

If you enjoy monopoly and still struggle to pull in revenue, you would have to go back to the drawing board and evaluate your product, approach and target market.

Pricing is just one of the numerous reasons why your product might not sell, you need to spot and plug the loop holes that aren't price related.
Carolyne Bonareri Mweberi
The fact that the business is struggling to make money, that should be an indicator of an underlying issue. So first, take a look at what stage your business falls under in the product life cycle, are you in the initial development stage? or decline phase? products at these phases tend to have reduced sales. Doing an evaluation will also help you discover if you've attained any product market fit in the first place. People are always willing to pay for a product that solves their problem.

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Nikke Blout
Senior Director, Product Marketing

Hi Kolapo, my thoughts: While pricing is an important aspect in product marketing, there is so much more to consider. For instance, what is the positioning of the offering, and more importantly, of the brand in the market place? What is the positioning of the brand in the minds of the target audience (mind space)?ย 

When done well, strong positioning can actually help companies increase pricing to gain better margins while also gaining market share.ย 

Lowering prices could be considered, but only if it does not lead to a potential "slippery slope" as competing on price only could ultimately lead to a losing battle.ย 

If a business is struggling to make money, it should take a closer look at its overall strategy and seek opportunities to be more innovative, gain a more competitive advantage and/or find legitimate ways to increase barriers to entry, etc. before jumping to change the price tag.ย 

Rachel Jamison
Lifecycle Marketing Manager

I think it depends on the value of the product in the market. If the product is priced at a rate that the customer is willing to pay, then you shouldn't have to change it. If not, then consider lowering or raising it to meet customer expectations. Do some customer research to be sure of this.

Another option is to diversify your product offering or, depending on the brand, find ways to make money in other areas like partnerships, advertising, etc.