Just when we were beginning to feel some relief from gas prices, the cost of our utilities may be going up. LG&E has requested an increase of 12 percent for electricity and 9 percent for residential gas. The increase is supposedly needed to cover the costs for repair of some aging and damaged infrastructure, as well as other expenses.
Few customers would be very eager to pay more even when economic times are good. But, the request is especially tough to swallow with many of our personal 'economies' still struggling.
How does a price increase make customers feel? What are the consequences when the market doesn't want to bear it? When consumers have little or no choice in utility providers, or when buying other products & services, we often feel like we're being taken advantage of when the price goes up.
But, there are a few exceptions where high value does get the higher price it commands. Companies like Apple, Lexus, Ritz Carlton Hotels are prime examples. (Who doesn't have an iPod these days!)
These companies teach us a lesson that other companies can benefit from.
Here are key points customers will consider when deciding if a price increase is palatable:
- Has the company built up a track record of credibility, fairness and "brownie points", if you will, throughout our relationship?
- Am I getting a good value for the cost?
- Has the company been a good steward of my money?
- Does the company value my business?
- Are they responsive and willing to take care of problems?
- What am I getting in return for the higher price? Does the 'value' gained match or exceed the price I am willing to pay?
I'll be anxious to see how the LG&E rate increase request turns out. Stay tuned!