It’s inevitable. In 2022, businesses in almost every industry see the need to increase prices. This is happening for a number of reasons, including:
- An increase in the money supply
- A decrease in the production of goods & services
- An increase in global demand for goods and services
It’s called inflation & it is ON! It’s effecting supply chain, the price of materials, transportation, & on & on & on.
What’s that mean for us in Sales? It means having a difficult conversation with our customers. Or two. Or three. That’s right, we have clients that have raised prices 3 times in the last 18 months (& we’re quite sure some have done it more than that).
So, let’s have a quick tutorial on how to do it. How to have the “price increase” conversation.
Let’s start with a stat: The Consumer Price Index rose 8.5% in the last 12 months according to the U.S. Bureau of Labor and Statistics. The highest increase since 1982 – 40 years! So, if your company hasn’t announced that a price increase is necessary you should be surprised – very surprised.
Here are 8 things to keep in mind when having the “your price is going up” discussion:
- It’s Business, Not Personal
You need to remove your heart from this discussion. It is completely business. The moment you remember the “friendly relationship” you have with your customer & put their feelings above your companies profit the game is over. Friends don’t raise prices on friends. Be strong here. Business, not personal.
- Prices are increasing everywhere
This, in itself, is not the only reason you should raise your prices. But it is a fact. There is a good chance your suppliers have increased the prices to your company (materials, transportation, labor, etc.) When this happens, companies have two choices:
- Eat it
- Pass on the increases to the customer
You have a responsibility to your company & all of its employees to maintain margins. Remember . . . business.
- No e-mail announcements
Whenever possible have a personal discussion with your customer. At the very least a phone call. Imagine opening your email one morning only to read an email about price increases. It makes an awkward situation even more difficult.
- Give as much notice as possible
Again, whenever possible, it will be to your benefit to let your customers know about upcoming increases as early as possible. You need to plan; they need to plan. It’s professional & will go a long way.
- Explain the reason for the increase
You don’t have to be detailed down to the penny, but don’t just raise prices without an explanation. Let them understand the circumstances behind it. They understand – their company is likely experiencing the exact same thing.
- Alert your entire company
Make sure everyone is up to speed with the price adjustment. Sales will announce it. Customer service or inside sales needs to be aware & accounting /finance needs to be in the loop. The last thing we need is a customer thinking they are paying 18 & accounting thinking 16 – it looks bad.
- Be open to questions, comments, concerns
By the 3rd or 4th price increase your customer may not have as many questions or comments (out loud, anyway) but let them know you are always available to discuss. Most people need a chance to vent, get it off their chest. Give them that chance.
- A few conversation starters:
I have some good news & some bad news for you (make sure there is good news or don’t say this)
Can we have a tough conversation?
You may have been wondering when we were going to raise prices, well here we are . . .
Driving here today, I wondered how I would bring this up . . .
Don’t shoot the messenger on this, but . . .
Is it easy to do? No. Is it fun? Probably not. Is it necessary? Yes. We are living in different times. The strong companies will fight through it. You are the face of the company & they are relying on you pass the message on (& not lose customers in the process). You can do it. This guideline will help.