Do You Still Like Your Surcharge Pricing Strategy?

 

A few years ago, it was popular for companies to tack on energy surcharges as a way of increasing the price without (in their eyes) actually increasing their price.

For years I’ve talked about how this is a dead-end strategy that will always backfire.

Every opportunity I had when working with clients, I would work to block proposed surcharges or eliminate them if they were already in place.

My argument is it might sound viable when costs are going up, but what happens when costs come down?

Energy surcharges are the most common one, and managers would tell me how there’s no way they’re ever coming down and the marketplace is too competitive to take a normal price increase.

How’s the energy surcharge strategy working now for you?  It’s not!

Energy prices have come down and guess what? Customers are clamoring for them to be cut.  This is where stupid meets stupid at the next level.

A company with an energy surcharge knows the reason for it is long past, but they don’t want to give up the revenue, so they eliminate the surcharge and replace it with a price increase.  Gee, that was stupid and that’s what I mean when I say stupid meets stupid.

Customers will see through that in a second and immediately call you out.

This is why the rationale for surcharges of any type are stupid, and I don’t care if you say otherwise.

Your costs must be in your price. Period. End of story!

If your costs are going up and you need to recoup them, you put it into your list price. This protects you when costs come down.

I want you to send this article right now to your brainiacs in finance, because guess what? As soon as energy prices start to go back up, they’ll cry out for a surcharge.

Stop the madness now!  No more surcharges.  Costs are either in the list price or they’re not. No exceptions.

Copyright 2015, Mark Hunter “The Sales Hunter.” Sales Motivation Blog. Mark Hunter is the author of High-Profit Selling: Win the Sale Without Compromising on Price.

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