How print companies CAN get higher prices – case study 1
Price, price, price!
I hear an awful lot of conversations at the moment about print buyers becoming ever more demanding on price. It is certainly a tough market out there.
But it doesn’t always have to be about price
I have two case studies that I want to share with you. And in each of these cases, printers were able to charge higher prices.
There are some lessons to be learned from these case studies too. Printers who apply these lessons will create stronger client relationships. They will have more control over their profits. And they will achieve a better sales pipeline.
Printers who ignore these lessons will struggle to create the right sales pipeline. They will fail to get work in at higher profit margins. And they’ll find that their customers respect them less as well: they won’t be able to create the right partnerships.
So let’s find out how to avoid all these issues.
Let’s look at the first case study
I remember meeting the director of a printing company. He had asked me train his print sales team in negotiation. “Matthew,” he said, “they give way too easily.”
The sales team were allowed to negotiate to a certain level. And the director was fed up of seeing prices booked in at the lowest price. The print sales team assured him that they had to negotiate this far to win the jobs. But the director wasn’t so sure.
So one day he raised the minimum negotiation level by 5%. But he didn’t tell the sales team. And they booked almost as much work as they had before the prices were raised.
And these jobs all had an extra 5%. An extra 5% which added 50% to the profit margin. And all because the print sales team had been a little tougher in their negotiation.
So what lessons can we learn from this outcome? Well the first lesson is all about mind-set.
You need to have the right mind-set when you are selling print
You need to assume that your services are worth a fair price. Otherwise you’ll end up believing that all print buyers should have a cheap price from you. And you’ll end up giving them a cheap price. Whether they wanted it or not.
That’s what had happened to the sales force at this print company. They assumed that they had to give way on price the whole time. But when they approached their customers with higher prices, the customers were prepared to pay more.
There was a reason for this. The customers had engaged with the print company.
To sell at higher prices you need engaged customers
The sales team at this print company had done a good job of this. They had convinced their customers and prospects that they should be dealing with this company. That is what led the customers to negotiate with them over price. And that is what led the customers to be prepared to pay higher prices.
If you make the conversation with customers all about price, they will buy on price. And you’ll struggle to sell on higher prices.
But you need to know what prices you can charge. And that leads us to the third lesson.
Print companies should price test
It is very tempting to sell to a company at the same price because you’ve always done it. But it’s worth edging up prices and seeing what happens. What would happen if you added another 1% to your prices? The customer might not even notice. And you might add another 10% to your profit margin.
But there’s always an over-riding doubt for many print sales people.
Won’t raising prices drive customers away?
Many print buyers are prepared to accept paper rises. And I have heard about recent magazine contracts where a prices rise has been built in. The printer is guaranteed higher prices at a certain point in the contract.
So some buyers are prepared to pay more. Of course, that doesn’t mean that they will automatically accept your asking price.
Print buyers will still want to negotiate
And print sellers need to be able to put up a good defence to this. They need to understand exactly what they can negotiate with other than price.
But negotiation doesn’t have to involve just giving way on price. There are many ways to reach a solution that is acceptable to both sides.
But before you get to the negotiation stage, there are a number of things you need to do.
Here are three action points to get you going
- Have a team sales meeting. Do your team think it’s all about price? Ask them to draw up a list of things that can move the conversation away from price.
- Review your sales message. Does it lead on price? Does it show the value that your company brings?
- Pick one long term customer. Raise their prices by 1%. You may be surprised at the results.
You may find out it’s not all about price, price, price
And in my next article, I will give another case study. In this one, you find out how I was persuaded to pay 12.5% more than I would normally for a job.
P.S. Do you want more ideas on how to improve relations with your print customers? Then you should subscribe to the Profitable Print Relationships newsletter. You’ll also receive our free e-book “Ten Common Print Selling Errors and What To Do About Them”. So sign up right now.