March 6th, 2015

Sales 101: Five Techniques for Positioning a Price Increase

sals-101-price-increase

Sales 101: Five Techniques for Positioning a Price Increase

Karl is a Sales Professional with McGinniss and Company[1], a leading supplier of raw materials to manufacturers. For 15 years, Karl has been using Sales 101 techniques to build strong relationships with clients, despite a volatile economy that has driven prices down and materials costs up.

Fortunately, the economy is improving, and McGinniss is seeing the benefits through increases in sales as high as 10% in seven of the last eight quarters. As a result, McGinniss is now in a position to implement price increases for the first time in seven years.

Karl doesn’t know what to do.

Like many Sales Professionals in the volatile economic conditions of the 21st century, Karl has never had to communicate price increases to his clients. Lacking experience in positioning a price increase, he is afraid of weakening the strong relationships that he has developed, or worse, losing clients by delivering this difficult message. However, for Karl, as for many Sales Professionals, economic growth is making price increases inevitable.

Fortunately, it is possible to maintain strong client relationships in this situation by following five techniques borrowed from Sales 101 for leading a consultative conversation about price increases:

1) Know the reason for the price increase. There are a number of reasons for increasing prices. For example:

  • Your costs (materials, labor, facilities, etc.) have increased.
  • The original pricing that you established with the client no longer reflects current conditions, and your margins are too low.
  • The market has shifted upward since you last quoted a price for the client.
  • Be honest with your client about your company’s reason(s) for the increase, which will help create transparency and build trust.

2) Anticipate client resistance. Think through the implications of the price increase for your client, and be prepared to acknowledge these implications. Anticipate in advance how the client will react to the increase so that you are best prepared to address his/her objections and concerns.

3) Neutrally position the price increase. As briefly as possible, lay out for the client why you are implementing a price increase, how much the increase will be, and when it takes effect. Do not belabor the point with excessive rationale. Remain neutral and confident. Avoid using phrases like, I know this increase is hard on you … or, I know this increase seems high … which could create a perception that you don’t support your company’s decision.

4) Remain silent after positioning the increase. Anything you say after that point will open up room for negotiation in the client’s mind. Do not ask a checking question. If the client raises objections or concerns, use the Objection Resolution Model to address them, but avoid creating the impression that the increase is negotiable.

5) Strengthen the relationship. End on a positive note. Thank the client for understanding and for his/her continued business. Express your enthusiasm for continuing to work together.

What sales techniques have you used to position price increases? Share them with us in the comments below!

Learn More About Richardson’s Consultative Selling Solutions

Want to learn more about how to position price increases, yet maintain long-term relationships? Click the image below or the following link to download a brochure on our award winning Consultative Selling sales training solutions!

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[1] Company name changed to protect confidentiality

About The Author: Paula-Jayne White

Paula Jayne White is a Senior Design Consultant with Richardson, where she is dedicated to the design, development, and execution of innovative organizational talent management strategies and the programs that realize these strategies. An expert in selling skills with over twenty years of talent development experience, Paula Jayne specializes in sales force and leadership development, and in programs that target, develop, and retain high potential talent in all roles. Paula Jayne has been instrumental to Richardson’s product and market expansion, spearheading, for example, the company’s efforts to introduce Richardson QuickSkills, one of the first eLearning sales curricula available in the market. In addition to her work with Richardson, Paula Jayne has held leadership roles as global Director of Professional Development for the Project Management Institute (PMI), the world’s leading not-for-profit membership association for the project management profession, the Performance Development Group (PDG), a learning consultancy specializing in the pharmaceutical industry, and Towers Watson. When not at work, Paula Jayne enjoys advising entrepreneurs to develop and execute sales, marketing, and communication strategies to grow their enterprises.

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One Response to “Sales 101: Five Techniques for Positioning a Price Increase”

  1. November 05, 2016 at 1:58 am, Dr. Christopher Croner said:

    Thank you for your valuable outlook on how to handle a company wide price increase. This is never easy to deal with, especially when having to confront clients that have come to know and trust you with their continued business. I think any time something like this crops up, it is important you properly train those responsible for breaking the news to clients. It is so important to approach this delicately while also standing your ground. As you mentioned, there should be no impression given that there is room for negotiation. Thanks again for sharing!

    [REPLY]

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