Should sales reps use a pricing increase to create urgency to buy?

I think that this all depends on the product/service that is on offer.

In the UK, it is typical of furniture and carpet stores to have 'massive' sales with heavily discounted prices. The problem with this is that the consumer is wise to these sales and just waits for the next one to role around, which is often only a month or two away.

It works if there is REALLY a price increase coming. It doesn't work if the "price increase" is the elimination of a discount incentive - - that comes off as unilateral.

It works better for products that are "one off" sales, but not so well for products or services that are sold as part of an ongoing customer relationships where the customer might view the price increase urgency as a questionable sales topic.

There is little that marketers and sales people can do to change customers’ clocks or calendars. But oh my, do we ever try! For example, how many of us have attempted to shortcut customers' normal buying cycles? We trot out all the usual enticements: not only impending price increases, but also price cuts, incentives, rebates, extended credit, and so on, especially at months’ end. The objective: to get the business quickly by convincing prospects and customers to leapfrog what they normally do.

It sometimes works in the consumer realm but not often in BtoB. The reason: important business decisions take time. Sometimes we can expedite the purchase order once the "yes" decision is made, but seldom can we compress the hours and days of the consideration process itself.

In a B2C sale it might work because consumers tend to be more impulsive buyers and it is not an organization decision involving multiple individuals. In a B2B sale, the decision is much more complex, involving many individuals/teams/departments (with sometimes conflicting agendas) and since price is often cited as the reason companies didn't buy from Company A but it is rarely the REAL reason why they didn't do so discounts, rebates, incentives rarely work to speed up the sale cycle... but what it does it set a new low for if and when the company ever buys from you. Go for building a solid relationship, establish trust and most of all demonstrate value to the buyer and you will in a much better shape then dropping your prices short of doing the former.

You can use pending price increases as a carrot. If you have prospects on the fence, locking in a lower price could get them over the hump. But if they were on the fence to begin with, they probably had already made up their mind to buy.

Price increases, of course, are very different from price discounts. Too many companies put their products and services "on sale" far too often, hoping it will generate more sales. But if your prospects get used to your frequent sales intended to drive urgency and activity, they'll end up having the exact opposite effect.

Offering a lower price will not inherently change the prospect's need for what you're selling. It won't change how they've prioritized the solution or its outcome in their organization. Get some buyers to commit who may or may not actually need or want your service, and you're setting yourself up for more expensive customer relationships, difficult deployments, higher churn, etc.

The best way to leverage pending price increases is with late-stage opportunities. Isolate the prospects who already have a need, already have urgency based on the inherent value and expected outcome of what you can provide, and get them to commit more quickly before the price goes up.

As an advisor on the enterprise purchasing side, I can tell you that these threats make little difference and generally ignored by seasoned decision makers. They're more like annoying background chatter.

After completing the important things like a business case, CBA, and proof of concept, the threat of a pending price increase can actually slow the procurement process. This is because decision makers can't know for sure that the amount they're budgeting will actually cover the cost of the product at the end of the process. It's important to remember that the purchasing process in an enterprise is often partially dependent on people who have no real interest or concern for the product itself.