7 Tips for Talking to Clients about Price Increases
Telling clients that you need to raise prices may not be the most comfortable discussion, but it is a necessary one. The reality of business forces every company to raise its prices, fees or associated costs over time, and it’s important to know how to deliver this news without jeopardizing your client relationships. Here are some of our tried and true strategies:
Give the client some notice—No client likes receiving unexpected bad news, particularly when it comes to money matters. That’s why you should always let your clients know of price increases as far in advance as possible. For example, if you are thinking of increasing prices in the fourth quarter, letting the client know during the summer can make it more palatable: “No decisions have been made as yet, Mr. Client, but we are considering raising prices in a few months. I want to bring that to your attention as you enter the planning process…”
Reference pricing when you make your appointment—When you make your appointment with the client, and establish your agenda, include some reference to pricing to minimize the shock factor: “I would like to spend some of our time reviewing our current thinking around credit, fees and the management of the relationship…”
Do it in person—Unless there is no alternative, these messages should happen face-to-face. After all, your job as the salesperson is to be there—to feel the impact, see the client’s reaction and understand how best to react. Breaking the news via email or on the phone makes all of the above much harder. This is a delicate situation, with business at stake, and such situations require a personal meeting.
Start positively—Once you are at the meeting and the time has come to break the news, you need to set a positive tone. For this, you can use Positioning Comments. These prepared thoughts set the tone for the meeting and reference the difficult news in an optimistic light: “Today I would like to discuss several subjects including pricing. But I want to be clear that what matters most to us is maintaining our excellent relationship, and regardless of what we discuss, I want this to be a productive meeting that allows us to express our thoughts in a direct and straightforward way.”
Explain the rationale—You aren’t just raising prices for the heck of it. There are reasons – explain them. Describe how costs are going up, discuss the impact of the rate environment, reference the cost cutting you have experienced and assure the client that you gave this a lot of thought: “Sam, as you know, we haven’t raised fees in years. We have already taken many steps internally to avoid raising prices such as reducing operating expenses and headcount. But in order to maintain our position as a leading financial institution, we need to take these…”
Explain the benefits—This is a tough one, but there are benefits to the client when you raise prices, even if they don’t recognize them immediately. For example, raising prices enables you to continue to provide excellent service. When you maintain positive returns, you can devote more time to research, product enhancement, system improvement and become better overall partners. Clients need to be reminded that you provide critical services that help them grow their business, and for you to continue to do you, you need to prosper as well.
Don’t forget the importance of empathy—Many consider empathy to be the most important behavior to demonstrate in sales, and now is a good time to do it. At the same time you acknowledge the client’s feelings, you can also remind them that they can raise prices with their own customers as well: “I know that these kinds of things are uncomfortable for both of us and that it creates additional work for you. But I am sure you can relate to what we are doing since you have to raise prices with your customers as well…”
Raising fees and prices is probably not the most enjoyable part of your job. But it is something we inevitably will have to do, and it’s best to be prepared. Hopefully, some of the thoughts above will make it less stressful, and help you limit any uncomfortable situations with valued clients.
Do you have any other tips for informing clients that your prices will be increasing? Leave a comment below and share your thoughts!