Latest / Sales Leadership with Fexingo: Quota Carriers, Sales Managers, and Revenue Teams / How to Handle Price Increases Without Losing Customers
Transcript
- Lucas: Let me start with a number that keeps sales leaders up at night: 18 percent. That was the price increase CloudLease, a mid-market SaaS company, pushed through in January this year. And the question is not whether they could justify it — it's how their reps sold it without losing half the book. Luna: Eighteen percent is steep. I've seen companies do five, maybe seven percent and still get pushback. What made them think they could get away with that? Lucas: Well, they didn't just 'get away with it'. They planned it. The CEO told me they started prepping the sales team three months before the increase took effect. And I think that's the first thing most companies get wrong — they treat a price increase as a billing event, not a sales event. Luna: So the rep isn't just delivering bad news. They're expected to sell the increase as part of the value conversation. Lucas: Exactly. CloudLease broke their approach into three phases. Phase one was what they called 'planting the flag' — every rep had to schedule a business review with each account sixty days before renewal. No mention of price. Just a conversation about what the customer had achieved in the last year and what they wanted next year. And the rep would come prepared with a one-page value summary showing the ROI the customer had already realized. Luna: That's smart. You're building a case before you ask for anything. And by the time the price conversation happens, it's framed as a continuation of that value. Lucas: Right. Phase two was the actual price notification, but here's the key — they never sent it by email. Every single account got a phone call from their rep first. The script was very specific: 'Based on the additional features and support we've added this year, we're adjusting our pricing. Your new annual rate will be X, which is an 18 percent increase. I want to walk through what that means for your team.' Notice they led with the value they'd added, not the increase. Luna: And how did customers react? I imagine some of them were ready to walk. Lucas: Some were, sure. But CloudLease had a third phase — a grandfathering option for customers who signed a two-year commitment. If you locked in for two years, you got the old price for year one and only a 9 percent increase in year two. That reduced the immediate sticker shock and gave the rep a reason to stay on the phone and negotiate, rather than just hearing a flat no. Luna: I like that. It turns the conversation from 'can you afford this?' to 'what commitment level works for you?' Lucas: Exactly. The result: CloudLease lost less than 5 percent of their customer base from the increase. And about 30 percent of their accounts took the two-year deal. But here's the stat that really struck me — a Forrester study from last year found that 68 percent of B2B buyers expect some price increase annually. They're not surprised by it. They're surprised by how badly companies communicate it. Luna: That's a huge point. If the expectation is already there, then the problem is purely execution. So what's the single worst mistake reps make? Lucas: Surprising procurement with a renewal letter. No heads up, no context, just a number on a page. Suddenly the rep is on the defensive, explaining why the price went up, and the customer feels blindsided. Once you're in that reactive mode, you've already lost control of the narrative. Luna: So the playbook is really about sequencing. First value, then price, then options. And it sounds like the rep's confidence matters just as much as the script. Lucas: Absolutely. If the rep sounds apologetic, the customer will treat it as a concession. If the rep frames it as a natural part of the partnership — 'here's what we've delivered, and here's what's next' — the customer is far more likely to accept it. One rep at CloudLease told me she actually started the call by saying, 'I'm calling because we want to make sure you continue to get the full value from our platform, and to let you know about some changes that support that.' She never said 'price increase' in the first thirty seconds. Luna: That's a great reframe. Instead of 'we're charging more', it's 'we're ensuring you get value'. I want to ask about commoditized markets though — what if your product is basically the same as three competitors? Can this approach still work? Lucas: It's harder, for sure. But I'd argue that in a commoditized space, the relationship and the service wrap become the differentiator. If you've done the work in phase one — the business review, the ROI summary — you've already differentiated yourself. The customer might be able to switch to a cheaper competitor, but they know exactly what they'd lose in terms of the relationship and the institutional knowledge you've built. Luna: So it's less about the product and more about the account management. Which means the quality of the rep matters even more. Lucas: Exactly. And there's a broader lesson here, which is that price increases are actually a test of your sales process. If your reps have been doing discovery and value articulation all year, the increase feels logical. If they've been order-takers, it feels arbitrary. The increase itself just exposes the underlying health of the relationship. Luna: That's a useful way to think about it. So for a rep listening who knows a price increase is coming in their company, what should they do today? Lucas: Start planting the flag now. Don't wait for the official announcement. Schedule those business reviews. Start documenting the value your customer has received. If you can show them that your product saved them two hundred hours last year, the 18 percent increase becomes a rounding error. If you can't show that, you have a bigger problem than the price. Luna: And if the customer pushes back despite all that? Lucas: Then you move to the grandfathering or a multi-year option. But the key is to have those options ready before the call. CloudLease gave every rep a decision tree — if customer says X, offer Y. No rep had to improvise. That preparation is what made the difference between a 5 percent churn and what could have been a 20 percent churn. Luna: I think that's a really practical playbook. I'm going to share this with some sales leaders I know. Lucas: Quick honest thing — a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these episodes possible. If these conversations have moved your work forward in some small way, that's the reason we can keep doing them ad-free. Luna: Yeah, it's a small group that makes a big difference. And it keeps the focus on the content, not the commercials. Lucas: Exactly. Back to the playbook — I think the final piece is timing. CloudLease announced the increase to employees first, then to customers, and they gave customers a 90-day runway before it took effect. That meant no one was caught off guard, and the reps had time to have the conversations without a ticking clock. Luna: So the takeaway for any rep facing a price increase: prepare early, lead with value, offer options, and never let them hear it from a letter. Do that, and 18 percent doesn't have to be a disaster. Lucas: Right. And if you're a sales leader, think about the system you're giving your reps. Are you giving them a script, a timeline, and a decision tree? Or are you just sending out an email and hoping for the best? Luna: All right, that's a good challenge to leave listeners with. Thanks, Lucas. Lucas: Thanks, Luna. Talk next time.