3 Key Price Increase Strategies That Work
Increasing prices can be a daunting task for many sales professionals. The fear of losing business as a result of the increase makes many a sales rep uncomfortable especially when it comes to your biggest and best customers. The accounts that buy the most have buying power and will use that power to get the prices they want.
The key to successful price increase negotiations is to be prepared.
Deliver the price increase with information and data for support. If your prices are increasing due to cost increases, be sure to present cost information and data that supports the price increase. Independent third party information such as indexes or trade association data will go a long way to establishing credibility.
And, present the increase matter-of-factly. This is no time for shyness or uncertainty. Say “The price increase is X%”. Professional buyers can smell weakness. Even if you are a little anxious about the discussion, act with confidence.
Despite your best efforts many buyers will still challenge a price increase. The key to effectively handling these discussions requires having a back-up strategy.
Here are three back-up price increase strategies to use when the buyer says “no”:
- Defer: Defer the increase for 30 days. Don’t take the increase off the table or reduce the amount but delay the execution for a short period of time.
- Trade Value: Offer to remove some delivered benefit from the offering in trade for a lower price increase. Some products, like software, are well suited for such strategies where you can easily adjust the deliverable. For others, look at delivery, payment terms, warranty periods or service levels to adjust.
- Swap Products: Offer to swap the product for a lower performing but acceptable product that is lower priced. We commonly see this type of negotiation with chemical type products.
Being prepared for these discussions is the single most important step that you can take to make your price increase successful. Once buyers see that you are negotiating and not just rolling over on price they typically will accept the price increase.
Remember, buyers will first test your price, then, your resolve.