Selling a Price Increase

Everything costs more over time. Sometimes businesses can get away with grandfathering in existing clients at their old rates, while raising prices for new customers. Unfortunately, there comes a time in every business where everyone’s prices will have to go up.

Often it is the lucky, lucky salesperson’s job to contact customers and let them know that prices will be going up. Some customers will accept a reasonable price increase without problems. Others will not. Here are a few ideas for handling the unhappy customers and (hopefully) keeping their business.

Give advance notice.

Notifying customers

It’s simple courtesy to notify customers a month or two before you actually raise your rates. This gives them time to check around (and hopefully find that your prices are still in line with your competitors’). Often the shock of receiving a higher-than-expected bill will create hostility where none would otherwise exist, so giving a little advance notice can save you from some unpleasant conversations.

Understand the cause.

If you don’t know why prices have changed, you’re going to have a hard time explaining it to your customers. Before you start notifying customers, talk with your sales manager, other members of the sales team, or anyone else who is likely to know the background behind the change. For example, if your company is raising its costs because the product’s components cost more to make, that is a perfectly legitimate reason for the increase and one that most customers will understand.

Plan out the conversation.

Decide what you’re going to say well ahead of time, or at least sketch out a few solid points. Ideally, you could get together with the rest of your sales team and brainstorm on ways to sell the price change, so that everyone is armed with a few good ideas and (even more importantly) everyone is saying approximately the same thing to the customers.

Point out the bright side.

Sometimes there are ways that a customer can actually benefit from rising prices. For example, if your customers are primarily resellers you can point out that they can take advantage of the opportunity to raise their own prices, blame it on the supplier, and continue to make at least as much money from their sales as they were before the price change.

Find ways to sweeten the deal.

Come up with a few concessions that you can offer to really unhappy customers. Perhaps you can offer them a discount on their next purchase, upgrade them to a superior model, or offer an extra service such as a maintenance plan at no extra charge. Of course, these kinds of concessions should be the exception and not the rule - save them for really major customers.

Know when to let go.

Some exceptionally price-sensitive customers simply won’t accept a higher rate. In those situations, nothing you can do will make the customer happy, so you’ll need to accept that you’ll lose those customers. Don’t take such losses personally – it just means it's time to move onto the next customer!