Sales & Marketing

GPI 001 – Reasons for price increases can also advertise your company’s best attributes!

All companies must raise prices at some point; otherwise they die a slow death. The time to raise prices is an individual decision, but it becomes more difficult and destructive to cash flow, new opportunities, and long term growth, the longer a firm delays.

All companies must raise prices at some point; otherwise they die a slow death. The time to raise prices is an individual decision, but it becomes more difficult and destructive to cash flow, new opportunities, and long term growth, the longer a firm delays. It is far easier to raise prices selectively, a small amount annually rather than trying to catch up with one large jump after several years. The big increase is more difficult for the customers to accept.

Raise prices in small increments; they are easier to swallow and will generally be ignored. Increasing your prices is easier to do in small increments. Try small annual increases of 2% or 3% rather than a very noticeable one time jump of 10 -15% after five years. Plan to do this automatically as part of the budget. Unless material cost increases force an earlier decision, make it a normal course of your business and do not shy away from this management action. Get your customers used to it and be resolute about its implementation.

Announced or not, do not procrastinate; raise prices. Many companies do not talk about their price increases; they just raise them. Some post notices and some do not. Some buy new menus, put new stickers on the old ones on New Year’s Eve or publish new rates at the back of their edited manuals or brochures, and wait for their customers to remark. It is worth the explanation to mention, when asked, that you did not raise prices for the past three years, or you held off as long as possible, but your company could not wait another year. Customers forget they have benefited from your delay. They forget you saved them money year after year. For this reason, stand fast. These customers will be the first ones to complain even after years of holding prices down. Hold your ground, emphasize the positives of your decision and go forward. Otherwise, you will slowly go out of business.


Write down your reasons for raising prices. Write down what costs have gone up that the customer may not know about. Write down the item increases you absorbed and swallowed as a business owner, that customers take for granted. Regardless of when you raise your prices or why, prepare a listing of reasons that also indirectly remind your customers why they return to you year after year. You do not have to publish, drawing attention to your increases, but have these reasons written up to remind all of your employees. Train your people about how to respond when asked. Have the lists available and make them persuade your customers to nod in agreement and be glad they buy from you. Give them some reasons on this list. Remind them how good your products are and how indispensable your service is. Here are some ideas on how to announce your price increase plans in a persuasive manner.

Suggestions (examples) for persuasive price increase arguments:

  • Food Menu: We increased prices this year because the organic grain fed beef prices we pay has risen sharply over the past couple of years. It is the only beef we buy, because it is the best available superior product on the market and it remains the only choice we reserve for our customers. We decided three years ago to use only this highly regarded selection of beef for our menu entrees. We have held back reacting to these rising costs, but we must pass these costs on starting in January. When our customers order beef selections from our menu, they know, after serving them for 17 years in the metro area, we will bring only the best available to their table.
  • Metal Prices: Due to stainless steel cost increases incurred over the past eighteen months, we are providing you, the customer, a ninety day notice that we are forced to increase prices $75/ton effective March 1st. We have used our mills in Brazil now over 12 years and have experienced no quality problems with these sources. For this reason, we did not wish to take on the risk of placing large, irreversible, six- month orders with questionable mills found elsewhere throughout the Far East. We cannot risk delivery failure to our customers, so we will not place them in a future shortage position. We take great pride in having never failed at mill deliveries over our 15 years in the market. Our customers come first and they buy assurance from us. They deserve premium service and we are happy to continue to provide it.
  • Consulting Fees: Please note that our firm’s professional consulting prices will rise slightly in January of next year due to our board’s decision to further restrict selecting candidates who only possess masters’ degrees, in addition to 15 years of applicable and appropriate work experience. Staying with that hiring criteria after twenty-five years has made our firm the oldest, most experienced and most highly awarded consulting firm located here in the tri-state area, now proudly owning a seasoned staff possessing over 890 years of engineering and business experience that you expect and can count on.
  • Tax Preparation Fees: Our fees for tax preparation will increase an average 7% on January 1st, due to a number of costs associated with procuring personnel expertly acquainted with the new tax regulations passed this past month in Congress. Our staff was increased by three new people, well versed in farm subsidies, depreciation methods, accelerated depreciation methods and the newly adopted rules covering research and development, passed in Congress. This appears to be certain to save money for our existing clients who manage large expensive on-site R&D programs. We appreciate your continued support. Be assured, our qualified and well educated staff aims to cut your tax bill and will beat it to death before asking for your final signature.

When everyone else is raising prices, think seriously before deciding not to join the crowd. Remember to remind customers when you have not raised prices. If you are in a position where all of your competitors have raised prices and you do not have to, you may be able to increase your market share by announcing you have held prices unlike the competition. You can look the hero and milk the marketing because you held prices and are helping the consumer. Beware. This may very well be a large mistake on your behalf, given that hiking prices at the time all others are leading the way will always be the easiest time to boost your company’s revenues. Think before resisting and trying to make it a marketing ploy.

Do not miss opportunities. You can try to cut costs every day, but raising prices is far more difficult. You may be able to use this opportunity to get more customers through the door, but reconsider your decision seriously, because when all of the market players are raising prices, this will be the easiest time with the least resistance to increase your revenue. In this case, when others have led the way, your price increases will not stand out. You are not the only bad guy, because ‘everybody is doing it’ or ‘we all are forced to raise prices, given current cost trends.’ This is the only time that customer’s anger gets diluted when every one of their options has raised prices. Consumers become used to the price level and develop new expectations based upon new information.

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