Yeah, that’s a 12.5% price increase on this Chinese iem. It’s happening on countless iems.
You went through an inflationary environment back in 2022. You already know the playbook.
- When prices increase, customers cut back on units purchased.
- Selling fewer units “can” work with your loyal customer base.
- Selling fewer units seldom works when trying to acquire new customers.
I mean, you’ll make the math work, you’ll raise prices. And in the p&l below, your marketing campaign will “work”. Demand/Sales can equal out, profit can equal out, your ROAS will be fine.
Now, look in the table below … what is the one metric that struggles to meet expectations?
Yeah, units sold. And when it comes to new customers, units = customers. It’s a direct relationship.
This happened, all across my client base, ever since 2022. When prices went up, new customers went down. Because … math. When customers went down, growth didn’t happen as easily.
In other words, stop worrying about prices. You can’t do anything about ’em (other than respond appropriately or give up profit).
However, worry deeply about the impact on new customers. You knew this was coming. You likely had a plan for how you would respond, right? What was the plan your marketing team crafted in response? They should have communicated their plan with every single salaried employee.
What are the Action Streams you’ve scheduled, streams that show customers merchandise that is still cost effective (especially among lapsed buyers)?
Encouragement: You’ve been through an awful lot in the past twenty-five years. Business is hard, you are a seasoned professional who knows how to navigate challenging situations. Be a Leader! Society is sorely missing Leadership (capital “L” leaders). Nature abhors a vacuum. Fill the void, folks. It’s time to be a Leader.
