This is How You Tell B2B Clients About a Price Increase!
ฝัง
- เผยแพร่เมื่อ 22 ก.ค. 2024
- Is there anything worse a key account manager has to do than tell clients about a price increase? You're between a rock and hard place. Your company says to get the price rise across the line while your clients refuse to accept. Now what?
CHAPTERS:
00:00 Introduction
00:46 Start with a conversation
01:22 Give advance notice
01:46 Provide context
02:16 Don't apologize
02:46 Don't over-explain
03:14 Keep it simple
03:45 Consider alternatives
04:26 Negotiation strategy
05:13 Loyalty doesn't equal discounts
05:49 Annual price reviews
06:22 Define escalation process
07:12 Deliver a consistent message
07:38 Manage your feelings
08:25 Quick lap recap
09:17 The KAM Club
HOW TO TELL CLIENTS ABOUT A PRICE INCREASE
Conversation first, correspondence second. Give your clients pre-warning that a price change is coming.
Give advance notice. Your clients will need to take further action in response to a price rise so give them enough time to do what needs to be done.
Let clients know what's changed. Frame the price increase in terms of the value you've delivered, the benefits they've received and the promise of more to come.
Don't apologise. You have every right to change your prices. It costs money to develop products, services and people.
Don't over-explain. Your client doesn't need to know all the gory details of what led up to your price increase. You'll only confuse them or invite conversations on topics that are none of your client's business.
Keep it simple. Complex pricing models are difficult to explain and hard for your client to understand.
Consider alternatives. Instead of a price increase, what else can you do to reduce the cost to serve?
Will you negotiate? Prepare for the best-case scenario and the worst. What's your walk-away price?
Loyalty doesn't equal discounts. When it comes time to renew, clients may expect discounts, not price increases, as a reward for their loyalty. Be prepared for that conversation.
Implement annual price reviews. Save time and set expectations by embedding annual price reviews into your agreements where appropriate.
Let me speak to your manager. Define escalation paths if your client does not accept a price increase.
Consistent message. Ensure everyone in the organisation delivers the same message to your clients.
Manage your feelings. Acknowledge that conversations with clients about price increases are tough and your feelings are valid.
⭐
Warwick Brown
Founder | Account Manager Tips
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Thank you for the content! I see this helping organizations experiencing rapid growth, or that are in very competitive industries where “price battles” may be more common (examples could be your telephone service rates, or even SaaS products for niche industries)
Always insightful sir!
Of course, there’s likely many ways to apply these lessons!
Love the advice on “not revealing how the sausage is made” - adding too much value/detail can grow to be unwieldy, quickly!
Thanks so much! Glad you liked the video and you're right about this applying to businesses experience rapid growth! In fact that's where I learned most of this advice - was when I worked for a company who had pretty much bought the business to get volume - no consistency in pricing, clients without contracts, no discipline or structure to anything. A mess. And by the time I started, one of my jobs was to tidy it all up, align pricing and reset expectations with clients. It was a huge undertaking and a lot of tough conversations. Part of growing up.
Haha, "how the sausage gets made" is one of my favourite expressions. There is such a thing as TOO much information. I've had times when I thought I was explaining something for example, how development was being prioritised and then it only spooked my client or made them think somehow my business was there's and they had a right to unpick our decisions - it became a bit like the tail wagging the dog. So learned the hard way to keep my mouth shut when it comes to unnecessary details. They almost always came back to haunt me!
Thanks for watching and for taking the time to leave such thoughtful comments. They also made me realise I should change the title to "B2B pricing" just to be clearer!
you all probably dont care at all but does anyone know of a trick to log back into an instagram account?
I stupidly forgot the login password. I would appreciate any tips you can offer me.
Im an account manager at an auto aftermarket company and we have had a price increase every year for the last three years. It hurts my heart more every year. And worst part is we arent adding any new or more value to tge product. In fact the company has been finding cheaper ways to make it. Quality and value are no longer #1 and its depressing.
I hear you. When the company needs to make more money, but isn't reinvesting that in the people or the product, it becomes an uphill battle with customers. As an account manager, every day you're in the firing line of complaints and issues and defending the company for situation you don't believe in. What's the answer? Move jobs or try to change things from within. What are you thinking?
There's no easy way to have a conversation with a client about a price increase. Nobody ever wants to pay more. I've learned to approach it like any other negotiation and the more prepared I am the better I can manage those objections when they come. What do you think?
Basically if I have a deal to do a project for X dollar, and it turned out I get so many unnecessary revision causing it very long delay for me to get paid. What should I tell the client with "if I can-would you" technique? Say I want to raise the price 200% what should I tell em?
If you find yourself going beyond the scope of the initial project then it's important you have a milestone/checkin/review as soon as possible so you can get everyone re-aligned. Let them know that the project is drifting outside what was originally considered and they now have a choice moving forward - they can either pay you to complete the additional work, do it themselves or revisit the scope of the project.
Your clients are probably excited about the work your doing and as you've made progress, they've lost sight of what you said you'd provide at the beginning.
With regard to payment, I always insist on 50% deposit and then depending on the nature of the work and duration of the project, would expect the balance to be paid in monthly instalments. So again, I'd remind them of your payment terms. If you're a freelancer or small business, you don't have the cash flow to accommodate payment delays!
I'm sure your client will be reasonable once you have an honest conversation with them about this.
Keep me posted on how it goes!