3 Ways To Justify A Price Increase
Most of you, if you are honest, dread approaching customers with a price increase. You fear the worst. What if they say no? What if they decide to get other janitorial quotes and you lose the business? I work with over 100 BSCs on a regular basis and what I’ve learned is that very few of them have price increases as part of their annual business plan. At best, price increases are a knee-jerk reaction. Because price increases add profitability straight to the bottom line, it must be in your strategy. Let me offer three justifications you can use with customers to get that next price increase.
Over the years, the demands of some customers keep increasing. Perhaps they add a few new offices to clean, or increase the frequency of trash removal. While this certainly justifies a price increase, getting the actual increase is a bit harder. Both you and the customer need to understand exactly what the base scope and expectations were along with how that scope has increased. When both parties are on the same page, you are in a good position to work out an increase.
Cost of Living
This is the catch-all category, but it genuinely does have merit. Over time, it costs more to do business and maintain a high level of performance. We have found that our customers also experience a similar upward trajectory in costs. Many customers expect a price increase on a somewhat regular basis because they give price increases to their customers. Once again, communication is key. Don’t spring it on them, but prep them, and discuss how prices will increase slightly over the coming years.
Keeping Good People
Finally, and perhaps what may get the most buy-in from customers, is the need for a price increase to raise wages of long-term employees. Many customers begin to love and appreciate the people cleaning their buildings. They want them to stay - they want stability. So when you approach them about giving a raise to a particular employee they like, it’s not so much that you are asking for a price increase (though you are), but you are asking them to help keep this employee at their location. Most customers are very willing to have this conversation.
Keep these three reasons in mind as you plan for price increases in 2021. Also, if you would like to get copies of real-world price increase letters we use at our company, consider joining our Elite BSC Mastermind Group.