The Invisible Game

Chapter 13What Is Your Re-pricing Strategy?

Unless you work for a company that is constantly launching new products, nearly all the products and services you sell already have a price attached to them. That means that your job requires you to re-price something rather than to set a price for it. When you are on offence, your re-pricing actions will fall into one of two categories, depending on your underlying cost basis:

• Price increases: You attempt to raise prices without a change in your costs. A successful price increase will boost your gross margin.
• Price adjustments: You attempt to raise prices in response to a change in your costs (usually an increase). These are common moves during a period of persistent inflation. The primary motivation behind price adjustments is to protect margins rather than increase them.

This distinction is important, because many behavioural, psychological, and neuroscientific forces come into play when buyers encounter a price change. Perception and reality can easily clash if they misunderstand or misinterpret your actions. That's why you need a re-pricing strategy to help you take advantage of the power of price increases and price adjustments.

The power of price increases

As most salespeople understand, if you approach a customer with a blunt in-your-face attempt to increase prices, buyers will most likely perceive it as an obvious and perhaps even brazen attempt to gain more margin. If they feel a potential sense of loss or think that ...