• Should Price Increases be a Surprise?

    October 7, 2013 | Bob Pantaliano
  • Bob-Graphic-No-surprise CFO adviceIt seems like throughout my entire career the subject of a price increases has always been a hot topic. Hot? Sometimes it’s nuclear. When, how much, and then why? Positioning your rationale is the real key here, and the most difficult aspect to master. But is it even possible?

    How can a company increase its margin to get a fair return without the customer coming away with a bad feeling or being suspicious about the need for the increase? Isn’t it natural to hear increase and think sure you want to make more money, or sure an increase is necessary but are you taking advantage of the situation and grabbing a bit more?

    It appears that the answer has always been a positioning statement that includes justification in some sense of the word. I need to raise prices because … because the cost of raw materials went up, because labor (union difficulties too) have increased costs … oh, here’s an original one that will go a long way, “it’s the economy”.  Might as well say the dog ate my rate card.

    I asked several friends and business associates the same question. How do you increase prices and make the customer comfortable with it. Some of the reactions were insightful, some confirmed traditional responses, and others, you know who you are, were less than helpful. “My summer home in Napa needs a new hot tub and I’m simply passing along the cost” just didn’t ring true with me.

    Be honest, positive and direct was the overwhelming theme. Things like giving less product or service for the same dollars was an overwhelming no-no.

    So, is there an original idea that makes a client feel good about the increase? I did find one that I thought was pretty good. It’s still not going to make anyone jump and down with glee, but I did like the approach quite a bit.

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