Almost every day you experience higher prices at your local grocery store, fuel station and a range of other places. From time to time, Government and unions require you to increase employee wages as well. Why are you the only one not raising your prices?
Your competition may be unwilling to ask for a higher price, but it doesn’t mean you should be.You are not your competition. You offer a different service, you are a different company, you have different people and hopefully what you offer is a better value at any price.
To be successful you must know your unique value proposition — what it is that sets your apart from others. Let your competition operate on margins so skinny that they are barely able to pay their people well, expand their company and service their clients.
I refuse to be the lowest-cost provider. I am committed to being the highest-value provider.
If you are scared to raise your prices, it may be because:
- You believe your customer buys only on price
- You have lost a sense of your value-added proposition
- Your team lacks sales skills and closing techniques.
Higher prices are good for your company. Higher prices allow increased compensation for your people, the chance to keep up with higher operating costs and hopefully greater margins for you to increase services to your clients.
Communication is key.
Recently I sent an email to my staff with a new pricing schedule: “You have 45 days to inform your clients that if they want to remain on the current pricing, now would be the time to make that decision as our prices are increasing in the next quarter.” This gave our sales team reasons to close more deals and our customers an opportunity to take advantage of the lower prices.
Never try to explain the higher pricing by saying: “Due to higher cost, we are having to raise our prices.”
Don’t blame inflation. Instead, increase the value of your offer. No one wants to pay a higher price and get nothing more.
The challenge with increasing your prices is never convincing the customer but convincing your own people. When I raised our pricing, I didn’t check with our people. I made an executive decision and explained to them when, why and how.
When you increase prices, do it in writing, give choices and, most importantly, add value to the offer. Explain the reasons that benefit the customer: Added content, additional service or support.
It could be something new or something you haven’t been telling your clients you do for them. I have never seen a company fully present all the things it actually does for its customer.