Written by Brand Analyst 

For businesses, passing along rising costs to the customer can be a difficult thing to do even though it’s a necessary evil. Consumers don’t want to pay more while providers don’t want losses. One company that has mastered how to go about this conundrum is Multichoice Kenya via their DSTV brand. Most of us love football and so we rely on DSTV to watch the matches. From time to time, DSTV keep on increasing subscription prices but customers stay on board. Why?

There are four golden rules to follow when initiating price increments and Mutichoice seems to have mastered all of them. Let’s see how.

RULE NUMBER 1: Alert customers to upcoming rate increases (in advance)

Your customers or clients may not be put off by rate increases if you provide them with advance notice and explanation of the new prices. Keep all communications strictly professional: Rising costs and additional education are acceptable reasons to raise prices; the fact that you’re supporting an aging parent (or that you are struggling to pay employees) is not reason enough.

Multichoice Kenya always announce price increases in advance. The common reason that the company gives for price increases is global inflation and variation of the dollar. This is a very professional reason. People rant for a while (mostly those who don’t have DSTV in the first place) then everything cools down and life continues. Quite a smart way to do it unlike what Orange Kenya did recently with their internet offers.

RULE NUMBER 2: Add service tiers

If you want to raise prices, consider breaking up your services into layers, or tiers. While you may keep the basic rate the same, you can add additional costs for extra benefits. Ahaa

I guess we’ve all noticed that DSTV mostly increase the prices for packages that have football content. These are the extra benefits being talked about. ,In just a few years, the subscription cost for the Premium package has gone from under 7K to over 9K. while the costs for other packages have remained almost the same or a little extra.

RULE NUMBER 3: Raise rates incrementally.

If you financial advisor is telling you that you need to raise your prices 20 percent to make a decent profit, and you put a 20 percent price hike in place all at once, you’re surely going to lose customers. Instead, raise prices in increments at five percent at a time, for example, in order to retain more customers. Don’t DSTV prices keep on increasing slowly? Oh yes they do. Magic

RULE NUMBER 4: Add value when raising prices.

People often make buying decisions based upon the expected value they’ll receive for their spent money. Consumers love getting value for their money, so if you must raise prices consider adding an extra bonus. For instance, a beauty salon owner can add a free manicure or eyebrow wax for every second visit. While this may seem like a free service, when combined with a price increase, you’ll likely still boost your hourly rate

Before or  even soon after a price increase, you will see an extra channel pop up on DSTV. Or maybe an extra exclusive showing. What they’re communicating to you is, “We are gifting you with something more. But you just have to pay something extra for it. Don’t worry. You won’t feel a pinch”

Genius huh?

No one likes price increases, but they are a fact of business — and a fact of life. The way you handle a price increase can either strengthen or damage customer relations, not to mention your business. Follow DSTV’s example and see yourself keeping your customer base.