IS IT HARD TO ASK FOR A RAISE? YES. SHOULD YOU? YES!!

Let’s say it right from the start—yes, it’s hard to ask for a raise, no matter what some books and articles say. In vending, a raise means increasing your prices. Whether the price increase is due to rising wholesale prices, or to meet operating expenses, it is a necessary part of being in any business. Here are some pointers on how to act effectively when you need to raise your prices:

1.) When introducing new products, you have a perfect way to increase your general price levels. For example, you’ve exchanged your regular potato chips, selling for 50¢, for a new brand or flavor selling at 55¢ (price increases are often in nickel increments). If the new chips are a hit, great! If, after several weeks, your customers prefer that you go back to providing the original chips, you could probably keep the price at 55¢ without any resistance (by the way, these prices are just for an example and may not reflect your actual prices).

2.) Don’t raise your prices every time there’s a wholesale price increase. For instance, don’t add a nickel to candy in April, add a nickel to juice in August, and add a nickel to chips in October. It makes you look chintzy, and your customers can get frustrated with the constant increases. It’s better to hold at your current prices as long as you comfortably can, and then increase across the board. You can let your locations know that you protected them from price increases as long as possible, but now your forced to make the increase to meet operating costs. Owners and management are in business, too, and understand price increases
as a natural part of the business world, and they’ll appreciate your professionalism.

3.) If you are expecting to make a general price increase on the majority of your products, it’s probably most effective to send a letter to the location’s management or contact stating the reason for the increase, the amount, and the date the increase will take effect. Some distributors feel comfortable sharing a Profit-and-Loss statement for a particular location, so the management really understands the need for the price increase. By the way, you may wish to call your price increase an “adjustment”, since it is adjusting the Profit and Loss ratio of your business.

Your letter will be professional, and in your last paragraph, be sure to thank your customer for their understanding. Provide your telephone number if they should have any questions about the increase; it’s less likely that you’ll receive a response to your letter, compared to a face-to-face meeting.

4.) Whenever possible, use world events to provide you with price increase opportunities. For example, the news might have carried a story about a disastrous coffee crop in Brazil, with predictions that wholesale prices will be increased. This often happens with different crops; for example, what if you heard that there would be a shortage of Hawaiian grapefruit?

This is a perfect opportunity to send the “As you probably know...” letter. Start your letter by saying, “As you probably have heard on the news recently, the Hawaiian pineapple crop has been affected by unseasonable cold. Due to this recent occurrence, we are forced to increase the prices on our grapefruit juice products.” Be sure to include the amount of the increase and the effective date, and you might want to clip the news articles to back up your letter. Don’t forget to thank your customer for their understanding.

5.) Do not just go in, change your prices, and walk out. This may be perceived as arrogance. If you think your customers “won’t notice the price increase”, you’re fooling yourself. If you worked at the office and used that machine every day, you’d notice the price increase, wouldn’t you?

Display a sign letting the employees know that there is a price increase, and why. Don’t take it for granted that their management told them. You might want to post a copy of the news articles mentioned in the previous tip, as well. Here’s a marketing tip used by Big Business: If you have separate snack and beverage machines, put the sign on the machine that doesn’t have the price increase; if you have a single machine, place the sign slightly away from the machine. If the sign isn’t right in your customer’s face when they go to make a purchase, it can distract attention away from the price increase.

 

Dana Bashor