Pricing During Inflation - What you need to know

What impact does an inflation have on your pricing strategy? Tune in below to find out!

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hello everyone and welcome to the pricing for associations podcast where we give away all of  

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our knowledge on pricing and value strategy for your Association I'm Dr Michael tatsanetti I'm a  

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certified Association executive and a certified pricing professional and I'm the founder and CEO  

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at pricingforassociations.com where we guide associations just like yours forward in their  

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pricing and value strategy so today I'm answering a question from an association Pro if you have a  

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question and you'd like for me to answer it on a future episode of the podcast just head to  

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pricingforassociations.com forward slash podcast and you can submit your question there and I will  

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be sure to answer it in the coming weeks please remember that as I answer this question this is  

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general advice it is not specific Consulting recommendations so take what we share as a  

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learning opportunity not necessarily the exact path forward for your organization okay all right  

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so today's question is is how do we price during inflation should we be raising our prices and so  

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how do we communicate this to our audience this is a phenomenal question currently as I'm recording  

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this it is February of 2023 and we have been going through uh inflation for the past year and  

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we know that this is a normal thing we're not even going to make it political on this podcast we have  

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recessions inflation all of these things kind of come and go about every decade it's just a normal  

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part of economics and how our country operates so with that how do we respond whether it's right  

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now in 2023 or if you happen to be listening to this in the future and we're dealing with  

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it at another time so here's what I have to say I have a few things to say about pricing during  

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inflation and how to operate the first thing is I do not believe in automatically raising  

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your price because we are in an inflammatory period where we have inflation now that might  

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sound controversial it's hey our costs are up and inflation is up you know 9 or 10 or 11 over the  

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past year I get that but if you actually look by industry there are certain industries where it's  

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up way more there are certain ones where it's not up that high that is an average so what we've been  

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seeing over 2022 and in 2023 so far is things like Airlines uh uh so so traveling on airlines uh gas  

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um things like that are all of about 30 40 percent but things like education which is a lot of what  

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associations do is only up about one two three percent so we can't first of all just take  

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the nine percent or ten percent and say we're just going to increase our price by 10 percent  

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now we do need to look at our costs our costs going up so things like an event therefore right  

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pulling off an event is going to cost more money shipping is going to cost more money  

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um uh uh traveling to the conference but it's also going to cost more for your attendees to get  

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there and your speakers and your sponsors to get there so do you you know put all that into your uh  

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events registration fee knowing that they have other costs that are astronomically higher the  

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other thing that I like to say is are you likewise going to lower your price when we're in a time of  

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um of of economic downturn where maybe we are in a recession and the costs of things goes  

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down are you going to reduce your price probably not at best during let's say covid for example  

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which was different that was a global pandemic you probably tried to give away some things for free  

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with digital education we couldn't meet in person but if we could have you wouldn't have given that  

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away for free because you have real costs of putting on an event so with that here is what I  

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do recommend this is what I think we should do I think we need to be doing value-based pricing so  

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we don't price based on inflation recession you know good times bad times in our economy that is  

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a consideration of what is your um what I would call your pricing floor meaning the lowest that  

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you would price you need to have enough to cover your direct costs indirect costs fixed costs  

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variable costs right we're going back to CAE study group days for those of you who are also a CAE  

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we have to understand those costs and make sure that we're making money but when we price based  

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on the value that's given and the transformation that allows us to justify the price even more so  

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instead of going to our members and saying hey you know inflation's hitting all of us so we're  

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just going to go up 10 your your you know uh five thousand dollar a year corporate or organizational  

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membership is now fifty five hundred dollars that's not going to sit well you're probably  

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going to have a retention issue you might you know uh you know end up having a long-term issue there  

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what is better is to say hey um we've added value again whether it's you know we're now  

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recording these things at the live event and we're putting them into a portal for members  

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only so if you missed the live event we're going to trickle out a couple of the talks and that's  

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available in the member portal uh uh you know for 30 days at a time and we're going to put out a new  

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talk every month so you're gonna get 12 talks a year if you couldn't make it to the conference  

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and in addition to that inflation's hitting us so we're you know going here but the point is Anchor  

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it more on value not on inflation now again I know that's like the knee-jerk reaction but I  

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promise that you know during covet a lot of people just didn't knee-jerk things they gave a lot of  

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things away for free and then I was saying don't do that and then people had a hard time recovering  

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from that in the one two and three years now post covid well really two years post covet  

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um so I'm saying that to say trust me when I say don't just increase based on inflation because  

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likewise I think some people are going to end up having issues where their bottom line is  

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very negatively impacted so hopefully that helps answer focus on value focus on what can you add  

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in what can you enhance it may not be something brand new could you enhance could you give more  

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time for something could you do more resources for something to also help justify the price increase  

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you know I've never gotten a letter from Netflix Hulu um Starbucks um my my any anything saying  

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we're raising your price because of inflation what they say is we've added programming we've  

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added value we're adding new things to our menu or we're increasing the benefits for employees  

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it's it's all value driven and then they raise the price so with that focus on value if you  

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don't know how to do that we're here to help so of course you can always reach out to us  

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um if you are first of all thank you for joining us and I hope that you found this content valuable  

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um if you are looking for more content specifically on pricing and value strategy for  

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associations you can follow along on our YouTube channel which is pricing for associations our blog  

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pricing for associations.com forward slash blog or on LinkedIn also again if you'd like to submit  

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a question feel free to do that at pricing for associations.com forward slash podcast and until  

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next time we look forward to delivering Great Value great free educational content if you'd  

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how to communicate based on the value we're here to help you connect to pricingforassociations.com  

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we can help your Association out continue to have a great day and thank you for joining us