Best Way to Tell Your Clients About Prices Increases and Other Bad News

It started out like any other sales meeting. Numbers flash on the screen and you are in danger of falling victim to Death by PowerPoint as management drones on and on with the speech you’ve heard countless times before, and could probably take over if your boss pulled a hammy and went down. At best, you are half listening, anxious to check your cell phone and hoping that your CSR will find a reason - anything - to interrupt and pull you out of the meeting. Just before rigor mortis sets in, your manager takes off his glasses and says, “And now to the bad news.”

With this, you wake from your stupor and listen intently as he proclaims, “We will be raising all prices across the board by 5%, effective immediately. You will need to meet with your regular customers and deliver the news. There will be no exceptions.”

Your shock is shared by every sales rep in the room as murmurs becomes raised voices of great concern and the volume of conversation turns into a roar. Shouts of, “Ridiculous!” and “Excessive!” permeate the din.

Senior salespeople are shaking their heads and junior reps are mentally rewriting their résumés. Your manager quiets the room and adds, “Gang, this is our first price increase in four years. We know this is not ideal, but you are going to need to find a way to deliver this information as soon as possible. This is part of the job, boys and girls.”

You’re Not a Nonprofit

One of the most difficult tasks that any salesperson can face is that of announcing a price increase. Blame it on costlier paper, labor, insurance and a desire to increase profits. There are myriad reasons and all are legitimate. Expenses have risen and unless your printing establishment is a .org, you expect to make money.

If a sales rep is lucky, years will go by without having to deliver the bad news to a client. But, eventually, the time will come when Pandora’s box is opened. Handling this sales situation requires skill, to be sure. But the fallout can be softened if the seeds are planted well ahead of time.

To demonstrate, consider these two scenarios. This is an actual occurrence and while not a perfect parallel, shows how to be prepared for price increases and many other forms of bad news:

Scenario 1: You are looking online for health insurance and settle on a plan. Cost: $700/month. Eager for something better, you call a health insurance agent you’ve used in the past. After a search, he finds you a better plan for half the price and emails the information. You are satisfied and enroll. Transaction finished.

Personal vs. Customer Service

Three months later, the agent sends you an email that reads, “The commissions paid by insurance companies have been dramatically reduced from previous years and I have experienced a significant hit to my income.

“This has caused me to ask that my clients pay a $20 per month fee to service the policy. There is no obligation. If you choose not to participate, you will have to deal directly with customer service going forward. Thank you.”

Okay. Stop there. What’s your reaction to this? If you are like most recipients of this email, you are somewhere between “are you kidding me?” and endless laughter over the chutzpah. He’s not making enough money so you have to cover the shortfall. Is he serious?

But wait a minute. Back the bus up for a second. How could the insurance agent have requested and received the fee? Figure that out and you will know the secret to raising prices.

If you were the customer in this scenario, can you imagine a situation where you’d not only be willing to grant the rep’s request, but be happy to do so? Let’s try this again. This time, we will write the story in such a way as to make the “price increase” palatable:

Scenario 2: You are looking online for health insurance and settle on a plan. Cost: $700/month. Eager for something better, you call a health insurance agent you’ve used in the past. After a search, he finds you a better plan for half the price and calls to deliver the information. You are satisfied and enroll.

Show Your Value Proposition

In a letter received a week later, the agent thanks you for your loyal patronage and toots his own horn, reminding you that instead of spending $8,400 annually, you will only be paying $4,200 and the policy he found you is superior. He even creates bullet points that detail the added benefits. Transaction finished.

That’s just good business and while he didn’t know the insurance company would shaft him, his follow-up has made it a lot easier when, three months later, he sends you an email that asks for a service fee, perhaps adding, “As you will recall, the policy I found you was a drastic improvement over the one you were going to purchase and your monthly savings is $350. Thank you for your consideration.”

Either way, you have to feel for the salesperson. But because he built his case well before finding out about the cut in commission by pointing out the value he brought, the reaction is a lot less negative and the customer is much more likely to pay the $20.

You bring value to your customers. You have to. The only situation where a price increase is even an issue comes when it’s a long-time customer and the repeat order is pending. If you are not telling your client on a consistent basis how good you are, how much money you have saved them, your amazing on-time delivery track record, the brilliance of the design you created and every other positive point regardless of its relative importance, passing along a price increase is the least of your problems.

You are completely vulnerable to losing the entire account when another vendor comes along and whispers in the customer’s ears tales of money to be saved. If that customer doesn’t know how good you are because you haven’t told them so (you assumed you didn’t have to), you can, will and probably should, lose that account.

Pray that you never have to pass the hat among your clients to make up for reduced sales commissions. But every sales career features multiple sales increases. Being the bearer of bad news comes part and parcel with the job.

If you’ve done something well, tell the client. If you’ve done something miraculous, shout it from the rooftop.

Your next sales meeting will be long and boring. But when it includes the news that prices are going up, be the rep who simply smiles and watches the unprepared panic. You’ve got this.