The Psychology of a Price Increase when Pricing your Products or Services
Posted on November 19th, 2008
Many customers are unwilling to accept price increase plus the fact that they also a threat by switching to your number competitor. All of us had to deal with the price increase in one form or another.
In reality, when the customer is presented with a price increase, they will only change to a competitor about 10% of the time. It because of the simple reason: the cost of switching to a new supplier is too great. Their main goal is to get the weak-kneed salesperson to cave in and give them a discount, and many of them are successful in securing on-the-spot price reductions just because of the forcefulness of their veiled warning of switching.
If the customer is planning to move to another supplier, focus on the cost of the conversion instead of allowing yourself to panic. The process is never as easy as you think it is going to be. See what they have and go through it to set up and start receiving from a new vendor.
To understand more, think of the added work you would go through if you were not just changing plans, but also changing companies. Because of the important amount required, you would probably think twice about making a switch.
Be prepared, do some research and figure out how long it would take for your customer to get a payback, let alone a return investment.
Most of the time, the threat of a belligerent customer to change suppliers is because of price increase. If the customer realizes that there is more time, effort, and money at stake than they have considered, the change will definitely be less appealing. By doing a study ahead of time, you can avert a problem situation by showing you potential customer that it is not worth it.
