Communicating Price Increases to Your Customers
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Eek! Price increases from several of your suppliers! Your customers won*t like that. How do you manage to pass on that price increase without losing business or giving away margin dollars?This is becoming a major issue for distributors. The economic
pendulum has inevitably reached its apex and begun to swing
back in the other direction. In many industries the pressure
to reduce prices is coming to an end, being replaced by upward
pressure on prices. If you are like most segments of the economy,
there have been more price increases announced in your industry
in the last three months than in the last three years combined.
Unfortunately, many sales forces are peopled with individuals who
have never lived through a time of price increases. They have no
frame of reference from which to view it, and no experience on
which to draw.
Anxiety abounds: *Will the customer refuse to accept it? Or
solicit prices from a competitor? Will I have to give away
gross margin and absorb the price increase in order to keep the
business?* These kinds of doubts lead to anxious and intimidated
sales people, declining sales and shrinking margins.
Not a pretty picture. Yet, as in any sales problem, there are
a set of proven practices and strategies that will make this
process of managing and communicating price increases less
threatening. Here*s a series of seven specific ideas to help
you effectively manage price increases.
1. Set up the situation.
The announcement of an 8% price increase on a major product
line shouldn*t come unexpectedly out of the blue. Of course the
customer is going to react strongly to the suddenness of the
information. Nobody likes to receive price increases, and even
worse, nobody likes to receive them without any indication that
they are coming.
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