Raise Prices...and Keep Your Customers

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  Aimee33306/12/08 Report as spam
  1

  been done for years!

  Don't let the $10,000 rebate on car sales fool you! or "extra" air time on radio/TV. This is how they've been able to raise the cost of business for years! It's been done for a long time "without warning!" If you're in sales you know you can make an increase in prices and hide it someplace else. If you have set fee schedules on services, Those fees are harder to hide, but as this topic discusses, it is about "value" to the customer. Think, "bigger than the BEATLES" and make offers they can't refuse with only -slightly- higher rates!

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  spettis06/12/08 Report as spam
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  RE: Raise Prices...and Keep Your Customers

  Rule #5: Plan for some lost customers. No matter how justifiable the increase, some customers will bail simply because they don???t have the extra money.
  
  In our business (automobile rental) I see this a lot. customers "bailing" due to lack of funds can be tied up in 2 ways.
  They don't HAVE the money (just not available)
  They don't HAVE the money to spend (they are expecting your pricing to stay the same despite other things increasing)
  They don't HAVE the money to spend with you (because another vendor of theirs has already increased pricing in their field causing them to have finacial trouble).
  
  Never the less if a price increase helps you rn your business, the client needs to understand that in the sense that they are business owners/managers as well with similar concerns.

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  spettis06/12/08 Report as spam
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  sorry

  for the typos.

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  1mgomez106/12/08 Report as spam
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  RE: Raise Prices...and Keep Your Customers

  great article and funny that i get to read it today. My business partner and I made our first attempt at raising our prices while speaking with one of our existing clients. great read, thanks!
  
  www.doodybros.com
  
  Michael

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  thomas.robertd06/12/08 Report as spam
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  RE: Raise Prices...and Keep Your Customers

  As a Indepenent Sales Rep I have had to raise prices on multiple lines mulitple times throughout the last year or so. Most times I stick with the "you get what you pay for" model. I tell my clients that the costs of raw materials is ever increasing. We try and mitigate price increases as much as possible, but to maintain production at our current and past level of quality we must increase the price.
  
  I find the key is letting the customer know where the money is going. If its going into my pocket, they're not going to pay the increase. If the money is going towards the actual item they are receiving, ie raw materials, I'm rarely met with oposition.
  
  Obviously this changes depending on what market you are working with, but I find that in most B2B transactions the customer is educated enough to understand when a price increase is justified and reasonable.

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  Geoffrey James, Sales Machine06/12/08 Report as spam
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  The wisdom of real life

  As always, when the real live sales rep speaks, it's pure wisdom. Robert sums things up perfectly.
  
  Note, though, that some B2B offerings, like web creation services, don't lend themselves all that well to the "costs are going up" story. Although, I suppose you could make a case that you have
  to pay more for top talent in today's market.
  
  Thanks Robert!

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  Ian P06/13/08 Report as spam
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  Keeping to agreed contracts

  To me the key issue comes at the end of the request. "A price hike through their contract term". How many of those contracts allow for a nearly 17% price hike. How many of your customers think they have fixed price contractsa with you.
  Although the charging rates here aren't excessive in European terms, remember that the US economy is contracting rapidly and many of your customers will have budgeted for your services in better times.
  Software services is an odd industry though. In most industries a big client base develops economies of scale and prices can be driven down to grow a business. In web support a big client base seems to develop diseconomies or increased cost.
  Perhaps rather then increasing prices when the economy is collapsing your employers should look to ways of managing costs through productivity gains (or wage cuts :0)--).

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  gonca.telli@...06/13/08 Report as spam
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  RE: Raise Prices...and Keep Your Customers

  Method Number one is not viable for a new company or financially troubled companies or SME's especailly for the developing countries.If there is a very good ongoing relationship with the buyers it has a probability of success with this method.
  
  Method Number two is for innovative companies and it depends on products and services it could not be used for some certain products or services especially for growth markets.
  
  I favoured rule number 3 adapt to circumstances.

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  Geoffrey James, Sales Machine06/13/08 Report as spam
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  Whoops!

  Oh, man, you are so right out this. Rather than "stay in business" I should have written "make a reasonable profit." I'll edit the post to fix this oversight on my part.

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  spettis06/13/08 Report as spam
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  reply to "whoops"

  I agree with you sales machine - sometimes we confuse the two terms "stay in business" and "make a reasonable profit".
  
  I would always bet to believe that considering who you talk to, everyones version of "reasonable" can and is going to change.
  
  God bess and Happy selling!!

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  MWI Negotiation06/13/08 Report as spam
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  RE: Raise Prices...and Keep Your Customers

  Raising prices can be tricky. One item that will help you raise prices (or even know whether it's a smart move or not) will be RESEARCH. Geoff alluded to one of the facts you might want, your profitability (if you're willing to open up your books and if you've truely been taking a hit).
  
  But other "objective standards" that make the case for a legitimate price increase include what your competitors are charging and standard profit margins in your industry (particularly if you're below average).
  
  If you can make a case to your clients that they've been getting a great deal all along and you're now leveling the playing field (rather than making them feel like they're getting gouged), it can be much easier for you. Further, a price increase only works if you are confident you're still providing the best services at the best rates. That way you can invite them to shop around and know they'll come back to you.
  
  Also, in terms of lots of warning and notice - this can often work in your favor. I often try to provide three to six month's notice of a price increase. Tacked on to this announcement is a statement that you're providing this info to your loyal long term customers so they can take advantage of the information and lock in future work at today's rates! Now you're doing them a favor!
  
  I hope this helps.
  Stephen Frenkel
  Director of Negotiation Programs
  MWI

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  Geoffrey James, Sales Machine06/13/08 Report as spam
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  Great advice

  Thanks for providing such excellent information. I'm sure that everybody really appreciates it.

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  gherdociam06/15/08 Report as spam
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  RE: Raise Prices...and Keep Your Customers

  I definetely disagree on rule #3. It probably worked before the internet, but today people talk, have mergers and belong to business centers and chambers of commerce.
  If you raise to some and not to all, you are in for a larger than expected lost accounts.
  In real world marketing, you either take an action or you do not. If you discriminate among your own customers....start looking for another job.
  
  G.Herdocia
  Mexico city

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  Geoffrey James, Sales Machine06/19/08 Report as spam
  14

  All screamers

  That's the case where all you've got are screamers. And that's not always the case. I know the president of a major shoe wholesaler who's never used the Internet.
  
  Pricing information doesn't necessarily have to become public knowledge. If you don't provide a forum for sharing it, and write price non-disclosures into your contracts, you've got a good chance of maintaining secrecy around a variable pricing scheme.
  
  Also, if you've hidden the price increase in a licensing scheme, you can keep some customers on the old scheme. If you make the new scheme confusing enough (oops! I mean "comprehensive enough), nobody would probably find out anyway.
  
  Don't kid yourself. It's been done.
  
  In one sense, it's all silliness anyway. If what you're providing has value, the price should reflect that value. If the price is too low, then customers are being babyish complaining when you raise it.