When you begin working for a company as a professional salesperson, increasing prices is something you accept as part of your total job responsibility. It is a necessary element of any business. No one can expect to run their business for the same cost today as two or three years ago. The increased costs of goods and services you receive from your suppliers, rising labor costs, and other operating expenses obviously must be reflected in pricing. Consequently, the prices of one year ago may be insufficient today.
Price Increases Have to Be Sold
Successful selling of the price increase requires a skillful explanation, diplomatically expressed. You don't go in to announce a price increase, you sell a price increase just as you are trying to sell any solution that responds to your customer's needs. Some salespeople have a difficult time selling the price increase because they are afraid of rejection. Not only are they afraid of rejection, but also of being the object of the customer's anger.
5 Tips for Selling a Price Increase vs. Announcing a Price Increase
- Ask your manager to sell the price increase to you. Have him/her point out the reasons for the price increase and provide you with all the necessary information to sell it. Find out what flexibility you have regarding the increase's implementation.
- Sell yourself on why your organization needs the price increase so you are convinced, and you can sell it with passion and conviction.
- Gather strategic supporting information. Collect and reproduce as much published information as you can find on the impending price increase. If there is any support for the increase on an industry basis, be sure to include that in your discussions with the customer. Use this supporting information when you are selling the price increase. Remember, anyone can announce a price increase, but it's a real professional who can sell it.
- Use LAER: The Bonding Process®. Oftentimes the customer reacts to the price increase with a preconditioned attitude and set of behaviors – most of which will be negative. When this happens, use LAER: The Bonding Process®. LAER: The Bonding Process® helps you stay focused and helps you behave in a rational and convincing way during the price increase transaction.
- If the customer begins to object to your price increase, you need to LISTEN to the customer. You need to get into the customer's Operating Reality through empathic, non-judgmental listening.
- You ACKNOWLEDGE this with a nod of the head, a concerned facial expression, or some kind of supportive reply to the customer's objection. An example of this would be, "I can understand your concern over a price increase.”
- EXPLORE to find out how you might get the price increase installed. You could ask the customer this question, "In what ways can we implement this necessary and responsible price increase in your organization with minimal negative impact?"
- And then finally, you RESPOND to the customer.
- Tell the customer about the actions your company has taken to confine costs and keep price increases to a minimum. In other words, if your organization has elected to cut down or eliminate promotions, advertising, or even team building events. Make sure you point this out to the customer.
Increasing price doesn’t have to be as painful as pulling teeth, although many times it turns out that way. It’s important to be confident, self-assured, and definite about the price increase. If you go into the customer tentatively and insecure—demonstrating the fact that you are worried—you are inviting resistance and weakening your ability to implement a valid, important price increase. Your future success, as well as the success of your organization, will be largely based upon your ability to raise prices and thus obtain profitable pricing levels.