It will happen at some point in your selling career that you will have to raise prices. Your customers are not looking forward to this conversation. Most likely neither are you. You are vulnerable to competition when you raise your prices. After all, who doesn’t think that when prices go up, and especially if too much, it might be time to find another supplier? You can raise prices and keep your customers. Here’s how.
Always be looking to prove that you are worth it.
What is a price increase conversation? It’s a conversation about getting a customer to pay more for the value he’s receiving. He is unlikely to be open to the conversation when he perceives that he’s not getting value.
A diligent salesperson looks for areas where he is reducing a customer’s cost, avoiding a customer’s cost, or increasing his revenue. Once the salesperson learns that he is contributing to his customer’s bottom line improvement, he documents it. Just talking about the value you deliver isn’t enough. You’ve heard that talk is cheap. It is. It’s not enough proof to help you keep your business.
Put it in writing.
When something is in writing it is perceived as fact. Salespeople make claims all the time about the great work they are doing. Their talk is useless in a price increase discussion. When it’s written it’s proven. Your job is to take the time to either write a “savings letter” or savings report. In the letter you will outline the original situation, what you did to improve it and quantify the results you delivered.
You certainly talk with your customer to learn the specific data you will need for your report. Your customer probably knows his business better than you do. You might have to guide your customer to get the answers you need. Ask questions like, “How many hours did it take before?” and How much time did it take after? What’s your production time worth/hour? Then annualize the data. Your letter or report needs to be specific. Saying “we improved…” without being able to quantify the improvement is not a valued savings.
You can take credit for the work you did. You should also thank the customer’s employees who you worked with to deliver the savings. They are more likely to keep doing business with you when you support the results they deliver at work, too.
What’s in writing becomes a useful tool when you sell to a new buyer as well. The most difficult price increase conversation is when your existing customer contact moves or gets replaced and the new employee isn’t loyal to you. It’s harder to lose your business when you can prove that you have been a valuable asset to the company by the work you delivered and the results you achieved for them.
What is your reason for the price increase?
You have to have a reason for the price increase. You will explain that to your customer. The reason ideally must be from the customer’s point of view. One example could be, “You’ve asked for more support hours. We want to implement the support. The support costs for us will increase.”
You might have a legitimate reason to raise customer prices. Perhaps your costs have increased. Show your price increase letters to customers. Ideally you won’t be going up more than the price increases.
You’ve heard the saying, “Pay me now or pay me later.” When you demonstrate value all along you will be able to get paid now and paid even more later as well.