Pricing for a Recession

As part of my monthly newsletter, I encourage people to “ASK TONY.”

“Do I raise or lower my prices or leave them the same.”  Thanks, Craig

Hi Craig.  Thank you for asking.

In my free ebook, The Recession Marketing Guide, I have written the following:

Evaluate Pricing - During economic downturns, businesses are tempted to lower their prices.

Lowering your prices creates three problems:

• Customers get the impression that you have been ripping them off the whole time.
• It makes it more difficult to return your prices to “normal levels” as the economy gains strength.
• It reduces or eliminates profit margins, which will eliminate your ability to market your business.

Arby’s has recently started giving away a Free sandwich on Wednesdays with a drink purchase. Obviously the drink is mostly profit and helps to cover the cost of the sandwich. However, this is a way where Arby’s can drive traffic to their stores without lowering menu prices.

To drive additional cash flow, Arbys is encouraging bulk purchases by offering a campaign that promotes 5 regular roast beef sandwiches for 5, with a limit of 250 sandwiches. By establishing a high limit they actually introduce the concept in consumer’s minds that buying more than 5 sandwiches at a time is acceptable. Companies, churches, and other groups are quick to react.

However, Taco Bueno, dropped the prices of several of their items by 50% or more for a month and then raised them back to their original menu price. The reaction of many people was that they were upset that Taco Bueno was raising prices on something that they apparently could afford to sell much cheaper.

I love Taco Bueno, but you can see a big difference between Arby’s strategy and Taco Bueno’s strategy.

To “ASK TONY” feel free to visit this page and ask your question.

Be sure to get your free copy of “The Recession Marketing Guide” by Tony Darrick Baker

- Tony Darrick Baker