Communicating price increases to customers is often difficult. Sales reps feel guilty and apologetic and may even offer unneccessary “sweeteners” to soften the blow. The secret is simple: Understand the facts and your market and don’t be so apologetic!
I was recently quoted in the Canadian Business Magazine stating:
“If you’re business-to-business, every one of your clients has built their company by running a smart commercial entity, and they don’t give away products for free. If you have a fact-based conversation to explain the rationale for a price increase, they will get it.” –Canadian Business Magazine, March / 2016 edition
If we can ignore our basic impulse to apologize for our price increase, we can turn it into an opportunity to remind the Client of the value our company is providing them.
How to Communicate a Price Increase to Clients
1. Explain why you are increasing prices with facts and market data. You need to justify your price increase logically. Be prepared to make a fact-based case.
(i.e.) If you are new into the marketing automation space and have increased the maintenance fee on your software from 14% to 19% you can reference that the standard maintenance software rate is 22% so even after the increase you are still below “the market”.
(i.e.) If you sell a manufactured patio door and a key component of your product is glass sourced from the US, you will share that the US exchange rate is XX% less favourable year over year, and all glass is sourced in the US.
(i.e.) Point to commonly shared market data points like CPI (Consumer Price Index) or the U.S.D.
(i.e.) If this is the first price increase in over a year, remind the client of how long your prices have stayed firm.
2. Give them advance notice: Try for 90 days in advance if possible. This
will allow your customer to load up on orders in advance of the price
increase if they wish.
3. Re-visit your ROI and Value Proposition. Remind the client of the return
on investment your solution provided or value your product continues to
provide (and it better be far in excess of the price).