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10 tips to arm yourself against price increases


24 augustus 2021

Even in these difficult times of price increases, buyers can achieve a competitive advantage. In this blog, 10 practical tips may give you some inspiration.

Many prices are increasing, it’s hard to deny that. The newspapers are full of articles about increased raw material costs, energy prices, and transportation rates. Every producer and seller will be pondering how these costs can be passed on to their downstream customer. And ultimately it is up to the buyer to make a decision.

Realize in advance that a salesman is primarily responsible for 3 things: a satisfied customer, higher turnover, and a higher margin. A price increase exposes the connection between these elements. The risk of an unsatisfied customer grows, but the opportunity to increase sales (and especially) the margin is huge.

A price increase is THE moment for every salesperson to also think about their profitability. Believe me, few companies do not take advantage of this opportunity. The impact on the result is enormous, just compare it to a price reduction or condition improvement realized by a buyer. If the other variables remain the same, this amount is directly allocated to the net result.

Salespeople are extensively trained in this. To make it more clear, here is a selection of available training courses in which salespeople can participate: dynamic pricing, inflation, price increases, price models, price wars, pricing power, pricing strategy, psychological pricing, and pricing segmentation and differentiation.

All this to win the battle of us buyers.

The main message is this: never trust the level and the justification of a price increase! Make sure you have the right data at your disposal to start a substantive discussion based on facts (!).

10 practical tips to arm yourself against price increases:

  1. It is ridiculous to base new prices for the next period on the (high) price of a particular moment.
  2. Always look at the trend line.
  3. Go back a long way in time to put the current price in perspective.
  4. Cut the graph to your advantage (the salesman, your opponent, will do the same).
  5. Play with using moment A vs moment B or using the average (again, the salesman will do the same).
  6. Don’t pay the price on the chart, but make a deal at -/- x % less (both you and your supplier want to do better than the market).
  7. Check if there are other materials and cost components involved (sales, your opponent, will emphasize the negative developments only).
  8. Measure the impact, combining prices with your volume (you don’t buy everything the supplier produces).
  9. Make it absolute and calculate the impact in real money.
  10. If you need to accept (e.g., in case of no availability) freeze the date and make sure you define a conditional future agreement now. Because what goes up…
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