Marketing Planning

What is Beyflation? + What it Tells Us About Raising Prices

Is Beyonce in town? Or why is everything so expensive?! Beyflation – a noun As it would be defined by Urban Dictionary: The economic impact of Beyonce coming to town. Prices are…

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Is Beyonce in town? Or why is everything so expensive?!

Beyflation – a noun

As it would be defined by Urban Dictionary:

The economic impact of Beyonce coming to town. Prices are driven up because people are all traveling from nearby cities to see this very popular pop music performer. The price of hotels, AirBnB’s, ubers, and other travel related items increase substantially – sometimes to a ridiculous degree.

beyflation-beyonce-inflation-economic-impact raising prices

In a sentence: “Why can’t I get a rental car when I arrive in Minneapolis?”

“Well it looks like Beyonce is in town Thursday, and we’re experiencing some heavy Bey-flation (or Baeflation).”

Similar to: Swiftonomics

“The cost of certain goods is retreating in some places, but that doesn’t include live music. Concert tickets have surged in price, to the point where economists are noticing.

Fans are shelling out a fortune for tickets to see the world’s biggest music acts, including names like Taylor Swift and Bruce Springsteen who haven’t toured for years. And while few doubt the star power of Beyoncé live, until now people weren’t factoring her into national inflation figures.” – Reuters on Beyonce Inflation

What can we learn from “Beyflation” for our small business?

Local small businesses fail to raise their prices when demand increases beyond what they can properly service.

This can lead to lower end experiences for customers paying full price, and them waiting 6 months or more to have the service completed:

  • Instead: Consider raising your prices to get the wait time down. 
  • Yes – more people will say no, but that’s ok. 
  • In the end – you’ll end up doing less work, for more premium customers that actually want to pay for value. 

baeflation-beyonceinflation-economics-swiftenomics-when-to-raise-your-prices

When is it appropriate to raise our prices?

Beyonce being in town – allows travel-related services to raise prices.

That being said – there are drawbacks to raising prices, and can lead to bad reputational problems if it’s done arbitrarily for most small businesses. 

Here are a few reasons you definitely should raise your prices:

  1. Increased costs: If your costs to provide the service (like materials, labor, overhead, etc.) have increased, you may need to increase prices to maintain your profit margin.

  2. Improved service: If you’ve made significant improvements to the service you provide, your customers may be willing to pay more for the added value.

  3. Higher demand: If demand for your service is consistently outstripping your ability to provide it, this might be an indicator that you could increase prices. This should be approached carefully though, to ensure it doesn’t alienate your existing customer base.

  4. Economic changes: If the local economy or the economy of your industry is improving, customers might be willing to accept higher prices.

  5. Increased experience or expertise: If you or your employees have gained significant experience or expertise that improves the service, this could justify a price increase.

  6. Competitor pricing: If your prices are significantly below your competitors for a comparable service, it may be time to re-evaluate. Customers don’t just look at price but also the value they receive, so if your service is of similar or better quality, a price increase might be justified.

However, any decision to raise prices should be carefully considered. It’s crucial to communicate clearly with your customers about the change and to provide them with enough notice. If possible, explain the reasons for the price increase, whether it’s due to increased costs, improved service, or other factors. This can help customers understand the change and see the continued value in your service.

Also, consider the timing. If your business is seasonal, it might be best to implement the change during your off-season, so customers have time to adjust before your busiest time of year. If your business is more steady throughout the year, try to avoid raising prices during economically tough times for your customers, if possible.

Communicating Price Changes: Navigating the Delicate Balance

Communicating price increases to customers is a delicate process. It requires a balance between maintaining customer loyalty and ensuring business sustainability. Here are some strategies to help you navigate this process:

  1. Transparent Communication: Be clear with your customers about why the price increase is necessary. Whether it’s due to increased costs, improved service, or other factors, clear communication can help customers understand the change and see the continued value in your product or service.
  2. Prior Notice: Give your customers enough notice before the price increase. This allows them time to adjust their budgets and reduces the chances of losing them.
  3. Value Reinforcement: Use the price increase as an opportunity to remind your customers of the value they receive from your product or service. Highlight any improvements or additional benefits that come with the price change.
  4. Customer Feedback: Listen to your customers’ feedback and respond appropriately. Their reaction can provide valuable insights that can shape your future pricing strategy.

The process of adjusting prices and communicating these changes to customers is complex, and it is important to approach it with a well-thought-out strategy. Done correctly, it can lead to improved profits while maintaining, or even improving, customer loyalty and satisfaction.

 

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