Selling a Price Increase: Is There a Good Time?

By Mark Hunter, “The Sales Hunter”

When is the best time to sell a price increase?  I am asked this question a lot and my response is always, “Right now.”  When I see the expression on the questioner’s face, I then back up my response with my rationale.

Making a price increase is not something to be taken lightly.  It has to be done with confidence, and too often people put off increasing their rates due to a false belief that if they only wait a couple of weeks, somehow things will be better.  Yes, waiting is an option, but usually the only thing you’ll experience is a stronger belief about why you can’t make the increase, as well loss of the added revenue during that time.  My perspective is that you can make a price increase any time any of the following conditions occur:

• A competitor has increased rates.

• You’ve incurred increase costs.

• Your clients have just raised their prices.

• Other key players in the industry are increasing their rates.

These four reasons are considered “market factors,” and any one of them is certainly reason enough to advance.  However, just because one of the above statements is true does not mean you should increase your rates; it merely means the marketplace is giving you permission to do so. 

Listed below are what I call “value factors.”  These are the real reasons why you would want to make a rate increase.

• Has your client realized added value during the past year from using your services?

• Is your client going to be realizing added value from what you provide them in the year to come?

• Are there improvements in service or performance you can document that your client would value?

• Will you be able to increase your strategic importance to your client in the year to come?

• Can you show your client that your services will provide them with a competitive advantage or minimize their risk in the year to come?

The main reason to make an increase is that your client is seeing increased value in what you provide.  When the client can see increased value, you have every right to increase your rates.  However, there could very well be other strategic or even tactical reasons why you would still not want to make a price increase.  Those questions can only be answered as you assess your overall business plan.

However, my perspective is that you should take advantage of increasing your rates whenever possible.  Being proactive protects your bottom line and provides you with some protection against price increases that you will encounter from your suppliers.

The more confident and comfortable you become in your pricing – including your rate increases – the less likely you will be to devote precious effort and energy to worrying about your pricing.  That effort and energy is better spent on showing your client how the value of your service meets their needs and the benefits they desire.

Read other articles and learn more about Mark Hunter, “The Sales Hunter,” at www.articleweekly.com/author/mark-hunter.htm.

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