How Not to Price: Time Warner Cable Presents Rate Hikes as Savings

5 Ways to increase prices

Time Warner Cable recently raised rates in my neighborhood. While the cable company’s marketing department tried to present the rate increase in a positive light, their promotion felt deceptive especially when the amount customers pay is 20-30% higher after taxes are added.

Here’s the letter I wrote to Time Warner Cable:

Dear Time Warner Cable,

Does your marketing department really believe that subscribers can’t tell that you’re charging them more when your oversized direct mail flyer dresses up your rate hikes to look like savings?

Despite your fancy, heavy stock flyer’s claim that “ We appreciate your business,” it states that “To thank you for being a Time Warner Cable ® customer…we are pleased to extend you additional savings.” Yet the copy says that you’re increasing the rate $10.00 from $29.95 to $39.95.

Please explain how a 33% increase in fees before taxes is a savings for your customers? Didn’t anyone in your company take basic math in elementary school where they explain that an increase in fees means that customers have to pay more for the same product? Let me translate for you: This increase DOES NOT equal savings!

Would you please explain why raising your prices shows that you care about anything other than your bottom line?

Yours truly,
An angry, over-charged customer

5 Ways to increase prices

Regardless of how it’s presented, a price increase is difficult for customers to accept. That said, a price change doesn’t have to leave customers feeling cheated. Here are five options to examine.

  1. Show how costs have increased. If the company is supporting the local market and keeping jobs there, customers may feel better especially when almost everyone has either lost a job or knows someone who has.
  2. Bundle services differently. Give consumers an option to get a different set of services based on how much they’re willing to spend. Understand that some portion of your customers will select the a lower priced service.
  3. Offer better price in return for a longer contract. Many firms allow customers the alternative of a lower price if they commit to an extended service contract. This can be a good competitive move in markets where there’re new competitors like cable.
  4. Give customers a bonus to show appreciation. For example, offer them a couple of free movies on-demand or a week’s access to a premium channel.
  5. Provide a free sample of a related product. This can be a cross promotion with another division or company that compliments the use of their product. For example, include a coupon for popcorn.

Regardless of how a company does it, rate increases still translate to higher prices for customers. In today’s wired world, assume that your customers are at least as smart as you are and have as much or even more information than you do, so be honest with them.

Happy marketing,
Heidi Cohen

Photo credit: zzzack via Flickr

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