{"id":1367,"date":"2022-10-14T14:37:57","date_gmt":"2022-10-14T18:37:57","guid":{"rendered":"https:\/\/www.peaksalesrecruiting.comblog\/how-to-sell-price-increases-to-overcome-inflation\/"},"modified":"2023-03-08T19:37:44","modified_gmt":"2023-03-08T19:37:44","slug":"how-to-sell-price-increases-to-overcome-inflation","status":"publish","type":"post","link":"https:\/\/www.peaksalesrecruiting.com\/blog\/how-to-sell-price-increases-to-overcome-inflation\/","title":{"rendered":"How to Sell Price Increases To Overcome Inflation"},"content":{"rendered":"
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High inflation rates have been a reality for over a year. Whether you look at food, fuel, or other costs, the price of everything is going up. Central banks are doing what they can to combat the problem. In the meantime, salespeople have a unique capability to combat inflation: selling price increases.<\/span><\/p>\n

Why Price Increases Are Powerful<\/strong><\/h3>\n

Let\u2019s imagine two companies selling similar products, like home air conditioning units. At first, they both make a gross profit of $250 per unit. When high inflation hit in 2021-22, suddenly, those profit margins shrank to $200. Higher prices for other supplies cause the shrinkage the companies have to pay for, like office goods, computers, and vehicles. One company implemented higher prices and raised its profit margin per unit sold to $275. The other company decides to do nothing hoping inflation will go away.<\/span><\/p>\n

At the end of the year, the company that raised its prices enjoyed several benefits. First of all, they have a far better profit for the year. That means they can spend more on bonuses and improve customer service standards. If their competitor takes no action for another year, the competitive advantage will continue growing.<\/span><\/p>\n

Why Don\u2019t Salespeople Focus on Price Increases?<\/strong><\/h3>\n

The business value of successfully raising your prices is powerful. Despite those benefits, very few salespeople are eager to pursue price increases. There are a few reasons for that. Sales incentives typically favor winning new accounts, so time spent attempting to get a price increase may feel wasted. Further, salespeople may not see the value or rationale for a price increase. When a salesperson is not sold on the purpose of price increases, they are unlikely to act.<\/span><\/p>\n

Finally, proposing a price increase usually feels uncomfortable. This discomfort is partially irrational. Yet it is also partially grounded in risk. If you raise your prices, you might anger customers who may seek out other options. Left untreated, the unwillingness to administer moderate price increases erodes profitability over time and makes it tough to remain competitive.<\/span><\/p>\n

Selling Price Increases Step By Step<\/strong><\/h3>\n

The path to successfully selling price increases as a salesperson is fraught with dangers. Use this guidance to minimize the risks.<\/span><\/p>\n

Step 1: Get Clarity On Pricing Decisions<\/strong><\/h4>\n

Pricing decisions work a bit differently in every organization. Some salespeople, for example, have the discretion to offer discounts to retain customers or close a sale. Increasing prices may be a different matter altogether. Ask management about increasing prices significantly if your company has not updated prices in over a year.<\/span><\/p>\n

Once you find the pricing decision maker internally at the company, ask them about pricing plans. Selling a price increase tends to be most successful when the salesperson has substantial preparation time. Proactively engaging with management early is essential. In all likelihood, you may discover that managers were already thinking about pricing changes.<\/span><\/p>\n

Step 2: Review Your Pricing For Increase Opportunities<\/strong><\/h4>\n

Assuming you have multiple products and services to sell, it is wise to customize your price increase decisions. For instance, increasing prices on a product that sells at a low volume will not help the bottom line much. In addition, consider whether contract-based pricing may constrain how and when your prices are changed.<\/span><\/p>\n

Your mission in this step is to find two to three opportunities for price increases. Start with your products and services and then identify specific customers second.<\/span><\/p>\n

Step 3: Get The Price Increase Quick Win<\/strong><\/h4>\n

Typically increasing prices is relatively challenging, but there is one exception to this rule of thumb: new customers. Unlike your current customer base, new customers have little or no knowledge of your historical pricing. Therefore, do yourself a favor and increase prices for brand new customers first.<\/span><\/p>\n

Implementing this step will help to support your case for other price increases \u2013 stay tuned for details in the following steps.<\/span><\/p>\n

Step 4: Create Price Increase Campaigns For Current Customers<\/strong><\/h4>\n

The following approach suits companies selling high-value products to businesses or institutional customers. In this setting, a salesperson may have a book of accounts that she regularly works with. These longer-term relationships give you the understanding you need to present a price increase.<\/span><\/p>\n

To build your price increase campaign, use the following steps:<\/span><\/p>\n