When you need to execute a price increase (and make it stick!)

© your company name. All rights reserved. Title of your presentation
When you have to
execute a price increase
(and you need it to
“stick”)
http://www.marketcrest.com 9720 Coit Rd. Suite #220-174 Plano, TX 75025

How to get your price increase
communicated, executed, and still keep
your customers.
A guide for sales executives and their
managers
Part 1

Managing the process of implementing a
periodic price (or costs) increase can be
harrowing, but it should be a normal part
business life.
All too often though, we see increases
deployed with mixed results.

The good news is there are steps you can
take to ensure your price increase “sticks”
and so do your customers.
During the series, we will answer some of
the most common questions on the topic.
We will share our experiences and suggest
some smart moves to make, while warning
you about a few dumb ones to avoid.

When is it ok to raise
customer’s prices?
In general, anytime you can do so successfully.
You perform quality work and should be paid
according to your value.
Never hesitate to have an internal discussion on
the topic. You don’t have to approve an
increase every time your sales/ops team
discusses it, but it’s a healthy business practice
to discuss increases on a regular basis.

Underlying assumption: Your company has decided
to increase prices and now you must execute the
increase successfully. Here goes:
First, Get your mind right. Your business has to
make money; and as long as it makes money… the
business has options and a future. When you are
ready to approach the client, be confident and fully
professional. Don’t make excuses or seem sheepish.

A price increase is often a business
imperative. Truth be known, we don’t like to
give them and our clients don’t like to receive
them. But, as professionals, it is our job to
implement increases and people are
counting on you.
So step 1 is to strengthen your mind and
don’t look back.

Smart Pricing Move: “Steel your mind” with the
knowledge that customers who threaten to
leave over a price increase, tend to do so only
8-12% of the time. Clients know the cost of
switching to a new supplier is expensive & risky.
Dumb Pricing Move: Go to the client meeting
with thoughts of getting “any increase” because
anything is better than nothing… dumb move.
Establish what you need during the increase
planning sessions and expect to get 100% of
your target increase.

Planning For A Successful
Price Increase
You shouldn’t attempt to raise prices without careful
planning, and collaboration with your senior team.
The stakes are high, so make certain there is a short,
written brief that explains the basics. Circulate it
internally to get sr. leadership feedback, and buy in,
on your strategy and implementation plan.
The brief should cover at least these three points:
1. Which products or customers get exactly what increase; and if
implemented fully, what is the total financial value of the increase to
your own company.
2. The exact dates you intend to communicate the increases, to
whom, and the main talking points.

Smart Pricing Move
Give your client at least 30 days notice of an increase.
Anything less is unprofessional and risks your
reputation and credibility with the client.
Also, they may need to make adjustments on their end
because of the increase. On a related note, never try
to slip an increase by the client hoping they will not
notice.
They always notice, and it will go poorly for you when
they do.

Smart Pricing Move
3. The third point you should cover in the brief is a list
of customers that are likely to kick and scream about
the increase. You must then, detail the nature of the
revenue at risk. Keep it simple and provide a 1-2
paragraph overview on each potential “screamer”,
detailing how you intend to respond if major concerns
arise.

Dumb Pricing Move
Counting on your charm and relationships to
“smooth” the increase over instead of taking time
to prepare. Instead, during the planning stage,
secure any proof sources or related third party
documents supporting the increase. Think
material, fuel, shipping, labor increases, etc. You
may not use or need them, but they will be helpful
to have in your back pocket in case they try to
negotiate.

Dumb Pricing Move
Speaking of negotiation, while this series is about
the proper process for planning and communicating
a price increase.
At MarketCrest, we believe that Sales and Marketing
leaders can have a significant impact on a team’s
win ratio by preparing for negotiations in a certain
way.
We will share our experiences and how we
approach negotiations in a future blog series.

MarketCrest is a firm focused exclusively on
Marketing Services and Consulting that drives
revenue growth.
Simply, we exist to help you compete and grow
and we expect to be held accountable for your
improved performance.
Learn more, and receive a free 1-hour consult
and Get Help NOW!
Next Slide Begins Part 2 In The Series

Part 2

Part 2 Communicating
The Increase
1st –You and your team have thoroughly discussed the
increase and why it is important it be executed
professionally and completely. Your “mind is right” and
you are firmly committed to the task at hand. (Step 1 ✔)
2nd –You have invested time to write a small brief
covering the nature of the increase and your plan for
implementation. It has been circulated among sr.
leadership to gain feedback and approval. (Step 2 ✔)
Next: When it’s time to implement the price increase you start with
a smart move.

Smart Pricing Move
In all client discussions (written or verbal) you
will be firm while still showing respect and
appreciation for the situation and your
relationship.
You make no apologies or excuses, keeping a
kind, but business mindset.

Smarter Still Pricing Move
You also document all the instances over the past year
where you have: been their hero; held/matched lower
prices; upgraded customer facing technology; beat your
KPI’s; saved them money; or helped them avoid certain
expenses entirely. Cost avoidance is often overlooked.
Having this data at your disposal will be critical to
providing a full view of your financial value.
Remember to calculate the total impact to the client
BEFORE they can. You might find that although there is
an increase, it might not impact their current year
financials as much as they imagine.

Mega Smart Pricing Move
In addition to the first two moves, you add the absolute
smartest possible move… provide the client options. By
helping them explore options, you’re being part of the
solution & a valued partner. The client could keep the
product/services exactly as is, or select a less expensive
version. In some cases, they could test some slightly more
expensive options with potential to provide a greater ROI.
Be ready with samples so they can envision the
possibilities. If you have anything else new or fresh to
offer, now is the time to bring it up. You might consider
offering a minor incentive to your client for giving
something new a try.

Let’s stop and respond to another commonly asked
question. When it is time to speak with the customer,
should I go it alone, or bring help?
If you expect significant pushback and want to increase
your likelihood of success, bring one of the sr.
executives. Executives are usually willing to make calls
in the field, and often, they can increase your odds.
Just remember to select someone you have made
successful calls with in the past.
Reality check: At this point, after presenting the price
increase, you will either feel confident or very worried. If
you are squirming in your chair, ask yourself if you did
everything in your power to build exit barriers to your
client leaving.

It is rare for a client to depart over a price increase, but
strong sales and marketing leaders create solutions
customized to their client’s business needs, in part to
deter that option. Solutions customized to integrate into
your client’s processes, render departing over a
standard price increase, unreasonable.
Think special materials, staffing, programming,
technology, processes, procedures, automation,
reporting…all exit barriers that smart leaders put in place
early and often. The relationship becomes a win/win and
emotions stay in check during challenging discussions.

Closing Anecdote
Several years ago, a client worth $8 million a
year to us, asked for a 25% decrease in price
and had competitive bids promising nearly $2
million per year in savings. Using the approach
we’ve discussed in this series, and a few more
we will cover in future posts, we avoided
discounting our prices, and we raised them.
Yes…raised them, plus extended our contract
two years. Aim high.

If this series exposed some areas of opportunity
for you and your team, remember:
“If you want improved results, you have to
change how you do things.”
That core belief is what drives us to be process
oriented when solving business issues. Have a
great week.

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When you need to execute a price increase (and make it stick!)

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When you need to execute a price increase (and make it stick!)