---
title: "What?! You Raised Prices and Still Sold Well?"
description: "Many business owners worry that raising prices will hurt sales. However, products that never increase in price often see declining sales and eventually disappear from the market. This article explores six effective strategies for raising prices while maintaining or even boosting sales, such as improving quality, repositioning the product, or using incremental price increases."
author: "王冠群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-04-21"
language: "en"
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# What?! You Raised Prices and Still Sold Well?

> Many business owners worry that raising prices will hurt sales. However, products that never increase in price often see declining sales and eventually disappear from the market. This article explores six effective strategies for raising prices while maintaining or even boosting sales, such as improving quality, repositioning the product, or using incremental price increases.

**Introduction**
Business owners often ask me: "Mr. Wang, my product sells well, but the price is too low to make a profit. I want to raise the price, but I'm afraid it will hurt sales. Have you ever had this concern?"
In running a business, you'll notice an interesting phenomenon: over the past 30+ years of reform and opening up, product price increases have been common; not raising prices is what's abnormal. In daily life, apart from lottery tickets, it's hard to find a product that hasn't increased in price for years. Products that don't raise prices for a long time see shrinking sales and eventually die out. It's not that consumers no longer need them; it's that they're not profitable, so no one in the distribution channel sells them. For products with stable quality, channel profit determines the product life cycle. Most products that regularly raise prices extend their life cycle and survive, some even thriving.
**Price increases generally happen for a few reasons:** 1. Raw material costs rise, forcing companies to raise prices passively. 2. Poor market price control leads to price inversion, so raising prices to rebuild the channel price structure. 3. Proactive price increases to boost channel push. 4. Following the trend because big brands raise prices. The direct goal of a business is to make a profit; the ultimate goal is to fulfill social responsibility, but the premise for that is still profitability. If product prices are too low and there's no profit, the company is doomed. So, of course, higher prices are better, but many companies that were selling well see sales drop or even die after a price increase. So how can you raise prices and still sell well?
Products that sell well after a price increase generally meet **two characteristics**: 1. They are daily necessities or monopoly brands, where price increases need no justification. 2. The reason for the increase is far greater than the magnitude of the increase, making consumers feel they got a bargain. For daily necessities like oil, salt, soy sauce, vinegar, rice, flour, etc., no matter how prices rise, you don't need to worry about how to sell them.
For monopolies or top-tier brands, this problem is easy to solve: raise prices on existing products by the amount of raw material cost increases, or even more. For example, PetroChina, Sinopec, Moutai, Wuliangye, LV, etc. Their target consumers are not very sensitive to price changes, so price increases don't affect sales.
For many domestic second-tier brands or unbranded companies, their target consumers are mostly middle-to-low income and extremely price-sensitive. If price increases are not handled well, they not only fail to increase profits but also cause significant sales declines. Common price increase methods used by general companies include:
**1. Improve Quality and Raise Price**
This means enhancing quality before raising the price. This strategy can be used by any company and is currently the most common product upgrade strategy. When a best-selling product has thin margins or faces significant raw material price hikes, directly raising the price of the old product can hurt consumer sentiment. The usual approach is to slightly improve the quality of the old product (using better or more raw materials), change or refine the packaging while keeping the main elements unchanged, and relaunch the product. Mainland consumers have eaten Master Kong's红烧牛肉面 for 22 years, with the price rising from 1 yuan per pack to the current 2.5 yuan. Each price increase came with quality improvements, weight adjustments, and packaging changes, such as adding visible eggs or larger beef slices. Consumers feel that after the adjustment, it's worth the price.
Key points for this approach: 1. Keep the core packaging elements and standard colors unchanged. 2. Amplify the quality improvement so the target consumers know and feel it. 3. If costs increase by 0.1 yuan, raise the price by at least 0.5 yuan, which increases both company and channel profits, invisibly boosting channel push and making distributors happy.
**2. Direct Price Increase**
This method carries the highest risk. If the timing is poor, it often fails. But if used appropriately during special periods, it can achieve twice the results with half the effort.
A direct price increase means for a product that is severely loss-making, calculate the break-even point and raise the price in one go to that point or even above. This method succeeds under two conditions: 1. Raw material prices rise significantly over a long period, and the loss exceeds the company's capacity. 2. Major competitors in the industry face the same situation and will tacitly raise prices at the same time. Only when both conditions are met can this method succeed and the product sell well after the increase. If raw material prices are only high for a short period, the increase is unjustified. If your competitors have large raw material inventories or want to expand market share and don't raise prices, your strategy is doomed.
In 2003, palm oil, a key ingredient for instant noodles, rose from 4,000 yuan per ton to 12,800 yuan per ton in just three months, increasing its share of the noodle price from 18% to 35%. The instant noodle industry has thin margins, and companies couldn't bear such a large increase, so under the coordination of the industry association, the whole industry raised prices significantly in the same month. When all major brands in a category raise prices simultaneously, consumer resistance decreases, and purchasing behavior is largely unaffected.
**3. Reposition the Product and Raise Price**
This method suits products that have some market reputation and sales volume but are slightly loss-making with low channel profits, making distributors see them as "chicken ribs"—not worth the effort but hard to abandon. Such products are already in decline; direct price increases are impossible, and quality improvements may not justify a higher price. Without product transformation, it's a slow death.
Repositioning means redefining the consumer group, segmenting the audience, extracting selling points different from the old product, and creating a product grade and image that is distinct and superior to the old one.
For example, Hebei Wangge Food's "Lip Movement" chocolate-coated cake sold at 10 yuan per jin, but the more sold, the more the company lost, and distributors weren't enthusiastic. However, it had some brand recognition. We repositioned the product: keeping the name but overhauling the grade, packaging, selling points, and sales channels. We positioned the new product as the first brand of white chocolate-coated cakes. The market was full of black chocolate cakes that melt in summer, getting on hands and clothes. We positioned it as the "First Brand of White Chocolate Coated Cakes." Grade: mid-to-high-end, retailing at 24 yuan per jin, with a six-piece pack at 12.80 yuan, 2 yuan more than the best-selling Haoliyou Q蒂. We targeted first- and second-tier markets and supermarkets. The slogan: "Lip Movement is Heartbeat." Technical features: sandwich filling, white chocolate coating, and Korean latte art on the surface. Packaging was completely redesigned. Launched in September 2014, it has been in short supply ever since.
**4. Opportunistic Price Increase**
Also known as "face-lift" price increase. To reduce the risk of direct increases, many companies use this method. Its advantage is that consumers and channel customers are less likely to notice, so sales are largely unaffected in the short term.
There are generally two ways: A. Reduce product weight or volume. For example, a snack pack goes from 100g to 95g per pack, with the price unchanged, invisibly increasing company profit. B. Keep quality the same but refine the outer packaging, then raise the price. For example, Yangyuan's Six Walnuts changed from 240ml to 180ml.
This method works when the product has a certain market base or is a best-seller.
**5. Small Steps, Quick Runs Price Increase**
This involves raising prices slightly each time over a period, or gradually reducing promotions, "cutting meat with a slow knife" to squeeze channel profits and increase company earnings.
Prerequisites: A. The product's channel profit is large enough that channel customers can accept a slight reduction. B. Sales are mainly by the case.
Guarantees: First, confidence must be passed down: top management to marketing staff, marketing staff to channel customers, ensuring that price increases or promotion cuts won't affect sales. Second, orders must be executed immediately; no exceptions for any person or market, as exceptions mean failure.
Henan Simeite Food Co., Ltd. used this method from 2006 to 2009 to create a miracle: whenever a product became sluggish, distributors and marketing staff suggested raising prices, and the more they raised, the better it sold. Eventually, they pulled a third-tier brand up to second-tier.
**6. Leverage Momentum to Raise Price**
First, leverage the momentum of major industry players or big brands. When they raise prices, small and medium enterprises can follow suit without affecting sales. Second, leverage consumer momentum. When a category is in short supply, you can raise prices appropriately. This method has nothing to do with profit or loss; maybe you're already profitable, but because the leading brand raised prices, you follow to earn a bit more.
Regardless of the method, to ensure the product sells well after a price increase, three issues must be addressed:
A. Provide a reason for the increase to marketing staff, distributors, and consumers—a reason that convinces and is accepted.
B. Marketing staff should benefit more from promoting the new product than the old one.
C. The new product's channel profit should be higher than the old one, increasing channel customers' profits, making them willing to cooperate with the price increase, thereby boosting channel push. This creates a situation where marketing staff and channel customers are willing to promote, and consumers are willing to buy. How could such a price increase fail?
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