Even the mostsales savvy among us have had to fight back the nerves that
materialize whenever we are faced with telling acustomerabout a price increase.
Talking about it never makes for an easy conversation. When discussing a
price increase in a business-to-business environment, it is important to
remember that our customers have probably had to have the same discussion with
their own customers.
A company exists only as long as it earns a profit and it can only do that if it delivers a quality product or service at theright price. This means that the key to any conversation about raising the price is to emphasize that such an increase will ensure product quality. As you begin to prepare your strategy for communicating a price increase, ask yourself the following questions:
1. Does the customer take your product/service and add a standard percentage increase in price when selling to their customers?
If this is the case, you can point out that your customer will make more money by taking a standard percentage of a higher amount.
2. What percentage of the customer’s
business is your product/service?
If the percentage is small, tell them that the amount of increase is only a small percentage of their total business. If the percentage is great, then you can emphasize that the price increase is necessary to maintain the level of product quality necessary for them to serve their customers.
3. Has the customer faced any other price increases from other vendors?
If so, try to identify what some
percentages of the other increases have been. If yours falls into the low end,
then you can point out how your increase is comparatively smaller than that of
many others. If your increase is at the high end, you can either explain how
yours is the only one you expect to take or that you wouldn't be surprised to
see others coming back to take another round of price increases.
4. How does the customer view you and the products/services you sell?
If you have a quality reputation and
record, then you can emphasize that the increase has been carefully thought
through and it is only being taken to ensure continued quality. If you have a
spotty record with the customer, then you should stress how the price increase
will allow you to begin addressing some of the issues in question by allowing
you to improve the overall quality of service they have been receiving.
Naturally, it is important to make sure all comments are backed with a
commitment to follow-through.
5. Will the customer raise an issue with the price increase?
Be prepared to show documentation of how
your costs have escalated and how other companies are experiencing the same
increases. (An example is the increasing cost of oil, which has forced any
company that uses petroleum in the manufacturing or transportation of goods to
most likely increase prices.)
When having this discussion, be sure to show empathy for the customer, but remain firm in what you're saying. If the customer senses any hesitation on your part, they will likely try to exploit it in the form of a price concession from you.
Now that you have a price increase strategy mapped out, let's have a look at actually presenting the price increase to your customers.