CUSTOMER SERVICE

Higher Price, Higher Sales

CEO defends higher prices in return for better quality services.
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OCTOBER 1988

Many CEOs are scared to death of pricing their products higher than those of their competitors -- even if the competing products aren't of equivalent quality or usefulness. Walter Riley, who heads G.O.D. Inc., knows the feeling. But his own experience with pricing strategy, he says, has taught him that you shouldn't be afraid to charge more if you're confident you're offering more.

At G.O.D., an overnight freight business, a price boost was the key ingredient in a mix that led to meteoric growth. From its founding in 1983 until three years later, Riley kept his prices competitive with other truckers. "We were toe to toe with them," he says, "and we still weren't getting any new business." In 1986 the company began pricing at a 5%-to-7% premium, and the price change, along with a small acquisition, in one year brought sales from $3.8 million to $12.7 million. Charging a premium price, Riley says, meant instant credibility. It also differentiated G.O.D. from its competitors. "Raising our prices startled purchasing agents into seeing that we weren't just like our competitors. And they were willing to pay extra for overnight delivery.'

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Last updated: Oct 1, 1988




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