IMPROVE SALES BY RAISING PRICES - THAT'S NOT A JOKE - WILLIAM EASTMAN

PROFIT RADIO..."Let's Grow Together"

Introduction
Today I am wearing my C Hat - Customers. That means I am running or hopefully managing people who are running marketing, sales, and service.

The second issue is the Stage of Growth. We are at Stage V where the concern is to look at our portfolio of accounts to determine customer performance.

Last thought before we start, I want to invite you to my new group on our Community of Commerce - Living the Life . If you are a serial entrepreneur and looking to discuss how to build a business that runs itself so you can start running multiple businesses - this is the right spot.
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Listen>Apply>Engage
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Objectives - The WHY
Touchy subject and best practiced with the lowest risk/impact to the business. Since you have already Top Graded your accounts, the next step is to understand why the bottom 10% are the bottom 10%. Our experience: (1) bottom feeders looking for a deal that will never become profitable - they're gone, (2) very demanding customers that drive the cost of servicing them - you'll cover those costs - if they stay, (3) unsophisticated customers that require excessive hand holding to keep them satisfied - you'll cover the cost of time, (4) bad pricing decisions that were our fault, not theirs - getting it right.

Key Issues - ​Owner/Manager Perspective: 

1. Bottom grading to eliminate no/low profit accounts.
2. Deciding how much to increase prices.
3. How to communicate the increases.

What You Need to Know - The WHAT
Pricing right is the fastest and most effective way to increase profits. A price rise of 1 percent, if volumes remained stable, would generate an 8 percent increase in operating profits - an impact nearly 50 percent greater than that of a 1 percent fall in variable costs, and more than three times greater than the impact of a 1 percent increase in volume.

A 5% price increase will drive profitability up by 22%, more than equivalent changes to other “tools of operational management”.

• EPISODE A.010 PRICING STRATEGIES & METHODS

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What You Need to Do​ - The HOW

1. Raise prices by 5% to make the accounts profitable.
2. Be upfront and totally clear: we are raising all prices to stay even with cost increases.
3. We will honor all existing contracts at set prices until the contract expires.
4. We will grandfather exiting accounts for 3 months to help defray cost increases or provide time to make other arrangements.
5. We will help you find another suppler.

​The purpose of this show was to cover the essentials of getting right in your pricing relationship with customers and align their expectations with the new reality.
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Make sure you leave some thoughts in the comment section below. I am interested in continuing the conversation.

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