EMC Publications

Raise Prices without Losing CustomersContact usMarketing & Sales Tips

by Colleen Francis

After three years of selling products and services at the same prices, your company decides a change is in order. It’s time to make a few price increases to better reflect the current market and rising costs.

Of course, anytime prices go up, sellers are bound to hear complaints from long-term customers. Some companies, in fact, believe regular clients should be exempt from price increases altogether; that there should be a reward for loyalty. And yet there are several other pricing methods that businesses employ as well.

The key factor in all these cases, of course, is providing advanced notice of your company’s plans. Pricing surprises are never a good thing in sales!

As the economy continues to gain strength, a number of Engage clients are introducing price increases to the market. To help, let’s review the three most common ways to raise prices, and how to do it without losing business from your regular customers.

A Universal Increase

The first scenario is the most straightforward: raise prices for everyone - new and old customers alike. In this case, you’re hoping your steady clientele will remain loyal even if they’re not thrilled to be paying more for the same products and services.

Ample notice is crucial. Make sure you give your existing customers at least three months advance notice to ensure you can work through any issues, address exceptions, and negotiate if you have to.

If you’re in a “mission critical” situation with a customer, or have them locked into a one-year contract, then chances are lower they’ll leave. Still, prepare for the fact that when you change your terms of service, you’re opening the door for long-time clients to say, “You know, we haven’t reviewed our contract for a while. Maybe we should shop around.”

To lessen the possibility of losing business, offer to extend the customer’s current rate for a few months or an extra year. Yes, this gives them more time to shop around, but it also increases the likelihood they’ll become more comfortable with the idea of your price changes. They might ultimately decide it’s easier and less costly to stay with your company than start over with a new one.

Go 50/50

Scenario number two is to keep prices the same for existing customers and only raise them for new ones. A client of mine sells to law firms and often sees this method applied. The lawyers will increase the billable rate for new customers, but not for long-term ones because the services and products they’re offering are the same.

In this case, it’s not just the customer, but also the law firm that is benefitting. That’s because it costs less each year to manage the same products and services for a long-term client. You know them well and therefore you aren’t continually trying to figure out what they want. And you’re also not investing money, time and energy toward marketing because you’ve already attracted their business. So even though you’re keeping your prices the same, you may find you’re increasing your overall margin with these existing customers.

Add Services and a Choice

The third and final scenario has several components: add more to your current offering, raise prices, and then give your long-term customers the choice to opt in or opt out. For example, “We’re increasing your rate to $150 because the service offering is changing. Now you’re going to have A, B, C and D as opposed to the A and B you were receiving before.” Then allow the client to choose. “Do you want to stay with what you had before or do you want this new, enhanced service?”

A client of mine recently did this with great success. They increased the price on their software maintenance and told their regular customers, “You were paying 10% and you received all the updates. Your rate is going to 12%, but that allows you to call the help desk whenever you want with questions and issues. We can keep you on the 10% plan to give you just the basic support if you really want, but we’re encouraging our clients to switch to the 12% package so you have the opportunity to call into the help desk.” More than 75% of the customers chose the new enhanced service.

This client has a rock-solid product and knew the company rarely received help desk calls. So while that 12% was providing more value to the customer, our client considered it low risk because the chance of people calling in on a regular basis was slim. And they were right. Customers only tended to call once or twice a year.

Extra Value of Advance Notice

As mentioned before, giving advance notice about a price increase to your long-term customers is crucial. But it’s also just as important for your sales team. For instance, if clients are notified six months ahead, it gives sellers a chance to hear feedback and determine who’s unhappy about paying more and considering taking their business elsewhere. They can work to save those customers but also have a chance to backfill if some clients are determined to leave.

Gathering this type of information allows your company to do two things:

  1. Make a decision to reverse the price increase or change the new service offering if you realize you caused a huge exodus. After all, companies do make mistakes - just make sure you catch them before they bankrupt you!
  2. If you’re sticking to the price increases, it equips your sales team with the time to go out and find new customers to replace the ones who are leaving.

However your company chooses to raise its prices, in the end it’s the strength of the relationships sellers build that will ultimately help decide if a long-term customer stays. And hopefully they will for many more years to come!


Make sure you check out Colleen's latest book, Nonstop Sales Boom for powerful strategies to drive consistent sales growth quarter after quarter, year after year.

Colleen Francis, Sales Expert, is Founder and President of Engage Selling Solutions (www.EngageSelling.com). Armed with skills developed from years of experience, Colleen helps clients realize immediate results, achieve lasting success and permanently raise their bottom line.


©2001-2015 Engage Selling Solutions. All rights reserved: All trademarks used or referred to on this site are the property of their respective owners. No materials on this site may be reproduced, altered, or further distributed without Engage's prior written permission.

Share This Information

Contents