As with any ‘difficult conversation’ it’s important to prepare properly for these types of meetings – anticipating objections and developing tactics to explain why the increase is fair and reasonable can help both your own self-confidence and deliver the end result you are looking for.
So – ask yourself these questions…
How can you explain that the price increase is ‘reasonable’?
I’ve put this first, because at the end of the day, most people do not want to appear unreasonable and it makes the conversation a lot easier if you can make it clear that the increase is based on fairness and logic.In our negotiation programmes, we always encourage participants to clearly position the price they are asking as reasonable – whether this is relates to the value your service delivers to the customer or your own costs.And this guiding principle is the same when asking for a price increase – so be prepared to clarify how your costs have escalated, how their competitors are experiencing the same increases or the rate of inflation during that specific time period. Accurate numbers are your friend here.
Has your customer recently had the same discussion with their own customers?
Brilliant if they have – and you can use this information to kick the meeting off. If they are increasing their own prices, it makes it much more difficult for them to play the “this is unreasonable” card – although it doesn’t of course mean they will make it easy for you.
Does the customer take your product/service and add a standard percentage increase in price when selling to their customers?
If this is the case, you can point out that your customer will increase profits by taking the same percentage of a higher amount. Slightly cheeky, but true if their own competitors are facing similar increases.
Has the customer faced any other price increases from other vendors?
If so, try to identify what the percentages of the other increases have been. If yours falls into the low end, then you can point out how your increase is smaller than that of many others. If your increase is at the high end, you may want to emphasise that you don’t want to drip feed a series of smaller increases.
What alternatives does the customer have?
We can sometimes get carried away thinking that if we raise prices, we’ll lose the customer, even though this is rarely the case. Think through what steps the customer would have to take to move to another vendor – how attractive is this option? – or for those of you who have been on our negotiation programmes – how strong is their BATNA (click here for a fuller explanation!)
Some Final Words – and how we can help…
Balancing essential price increases with client relationships is a key skill for any sales professional. Leveraging relationships, rapport and improved value is often not enough to create a win-win outcome, hence why we have highlighted why we think preparing is such an important part of the process.
Through Greenbank’s training courses, our clients have seen significant, attributable improvement in both recurring revenue and strength of client relationships. Every team is different, with complex strengths and weaknesses if you think your team could benefit from stronger negotiation skills please get in touch for a non-obligation chat, or sign up for one of our free taster workshops!
Greenbank are an innovative global training and coaching consultancy, focusing on leadership, sales and negotiation skills development, all 100% relevant to today’s business world. We offer a truly blended learning approach via virtual interactive training and when possible, face-to-face workshops (remember them???)