You are afraid to press send. You have written an email to your client to notify them of your impending price increase. You are worried that it may jeopardize your relationship—and potentially cost you their business. Over time, your costs have increased and generating the results your clients need means ensuring you have the profit to deliver those same results.
Here are four common mistakes when raising your pricing.
Avoiding the Conversation
When you send an email about a price increase, you are also sending another message, one that is going to make it more difficult to gain an agreement on the new pricing. The subtext sounds like this: “I am afraid to tell you about the price increase, and I am worried you are going to take your business elsewhere.”
If you want to look like you are doing something to hurt your client (instead of helping them), there may not be a better way to do so than hiding behind an email. The email you want to send gives the impression that you are afraid to discuss pricing and value creation because you believe what you are doing isn’t good, and right, and fair.
The very best way to have this conversation is face-to-face. It demonstrates your confidence that the price increase is necessary to continue to deliver the results your clients expect from you.
Failing to Justify the Increase
Your clients also increase prices to their clients and customers. They recognize that their costs increase over time, and they know that they need to be profitable to live, thrive, and survive—and create value for the people and companies they serve. That said, they need to be reminded that what is true for them is also true for you.
What’s more expensive now? Is it labor? Is it the raw material? Is it new governmental mandates? Without a justification, your client is left to believe that the price increases is your way of improving your margins, which in and of itself may be necessary, as too little profit may prevent your ability to execute.
Providing the reasons and factors that cause the price increase makes it easier to understand and accept the increase.
Not Preparing a Defense for Your Contacts
Someone is going to ask your contact about your price increase. Someone on their team has a spreadsheet with their costs, and you just changed one of their variables.
If you haven’t had a price increase for the last five years, that’s going to be something helpful for your contact to know. If the increase is based on some challenge that impacts everyone in your industry, like government mandates or new tariffs, you are going to want to provide information as to how the effects everyone equally, without any regard for how it changes their contractual relationships.
The more you prepare your contacts to argue on your behalf, the more help they can give you.
Being Overly Apologetic
One of the worst things you can do is to believe that you are harming your client. Prices increase over time. Sustaining the ability to deliver the outcomes you sell means ensuring that you capture enough of the value you create to continue to execute for and with your client.
Your price increase isn’t designed to hurt your client, and you cannot act or speak like this is true. Your price increase ensures that you continue to serve your clients—and to create new value for them in the future. Make sure that this is a large part of your message—when you sit down to speak with your clients.
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Filed under: Sales