HOW to put your prices up without alienating your customers is the kind of conundrum that can keep business owners awake at night.

Aisling Mackey, the owner of Cara Craft Supplies, an online retailer, says working out pricing is a hot topic with her customers, many of whom create handmade greeting cards to sell to shops.

“The topic most frequently returned to on our online crafters’ forum is how much to charge for each card,” said Mackey, who started out in business making handmade cards herself, having left a job as product director in a software firm.

“Coming from a computer software background, where I’ve seen similar products packaged slightly differently and priced at a radical differential, I know pricing is something of a black art. At the end of the day, it is all about the customer’s perceived value of the product.”

Her card-making customers invariably start out using the cost of materials as their way to determine their price. “That means they end up undercutting themselves,” she said.

“Business is all about the value to the customer, who in this case doesn’t know what the cost of the materials is, but values the ‘handmade in Ireland’ sign.” In London, for example, handmade cards sell for up to £8 (€11.60) each, Mackey says.

“You have to work backwards by testing your market to find what the customer is willing to pay.”

For businesses looking to raise prices, an even more complex set of rules comes into play. Tom Trainor, chief executive of The Marketing Institute, says the key is to find a way to deliver extra value.

“This means the customer doesn’t just pay a higher price, but can see there is something in it of value for them,” he said.

Consequently, the aim is to deliver more for your customer’s money. “You have to look carefully at your existing proposition before you introduce a price increase. Try to find elements that are valuable to your customer, but which will not necessarily be of extra cost to you,” Trainor said.

Identify some way of enhancing the overall customer experience. “There are very few true commodities out there with no differential other than price,” he added.

“There is always something you can do in the way you deliver to make it easier for the customer, perhaps in relation to the terms you offer.”

Selling on price is in any case a perilous game. “Winning business on price leaves you in a precarious position,” said Trainor.