An artist asked the gallery owner how his paintings were selling.

“I have some good news and some bad news,” said the gallery owner. “A gentleman was in here yesterday and asked if our paints will appreciate in value after your death. When I told him, ‘Yes,’ he bought all 15 of them.”

“That’s great,” said the artist. “But what could the bad news possible be?”

“He was your doctor.”

Let’s face it, nobody likes bad news — not the bearer, nor the recipient. The delivery of bad news, such as a price increase, calls for tact, diplomacy, and concern for the wellbeing of both the deliverer of bad news and the individual receiving the information.

First and foremost, you need to set the stage continually. Inflation and subsequent increases in prices and wages are nothing new. Start telling your customers as early as you can that price increases are coming and will continue to come in the future. Why? Tariffs, tightness in supply chains, the cost of freight, shortage of drivers, constraint of product, the never-ending threat of interest rates, etc. The increase in cost of funds means you and your suppliers have to be looking at upward price changes.

How To Do It

1.         Forgive yourself for being the bearer of bad news. You are not causing their distress, the news is;

2.         Choose a time and place when there are minimum distractions or interruptions, and talk face-to-face with your clients — no emails or phone calls;

3.         Get right to the point. Announce up front that you have some unpleasant, unfortunate, disappointing, or disturbing news. The right words? Simple: “I have some unpleasant news.” Have room to make concessions in your proposal, so they can feel as if they’re getting something in return;

4.         Try not to let the news come as a total surprise and be prepared for their emotional reaction. Let them vent, if they seem like they need to. Do not try to get them to calm down or be reasonable;

5.         After the customer has had a chance to vent his or her negative feelings, you can genuinely sympathize with those feelings. Then, after a pause, explain that the price increase is a fact of life, which you, your competitors, and their clients will need to live with;

6.         Explain the factors that made the increase necessary, such as higher energy costs, increased labor costs, greater worldwide demand, etc. Use collateral materials (newspaper articles and other background information) to help the customer thoroughly understand the need for this increase so that his or her team can sell based on those same principles;

7.         If the customer still refuses to accept the increase be prepared to negotiate. In advance, identify negotiables that can be put on the table. For example, the customer may be more willing to accept the higher price if you can stagger the increase, letting him or her buy some at the old price. And try offering additional services, such as assistance with the customer’s own marketing efforts, or improvements in logistics and delivery schedule;

8.         If the customer proposes to shop the competition, which is probably your greatest fear, let him or her tell you why. Learn what you might not be doing that you should be doing but also point to the benefits of your past performance, like that time you bent over backward with a Saturday delivery. The customer most likely doesn’t want to risk change any more than you do. But, if he insists on doing so, remind him of your desire to always be available with an open door when he discovers that the grass is no greener with the other suppliers. It’s a risk but it goes with improved margins; and

9.         The next time you have to sell a price increase, you can use your newfound knowledge and the cushion of time to soften the blow by announcing it as far ahead as possible.

As former British Prime Minister Harold Wilson said, “One man's wage increase is another man's price increase.”

Publication date: 11/06/18