Did you know that over 70 percent of machine manufacturers' customers look for alternative suppliers when faced with price increases? A striking reminder: while silence may be silver, speaking is golden – provided you choose the right words. After all, price communication in the parts business in machine manufacturing is more than just a compulsory exercise: it is the opportunity to consolidate or gamble away trust.
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Of course, a machine manufacturer might ask himself: Is it advisable to always inform my customers about price adjustments? Aren’t I provoking unwanted reactions – for example, complaints about price increases? How do I deal with this and, above all, how do I convince my customer to continue ordering spare parts from me despite the higher prices? Wouldn't it be better to react only to specific questions?
The fact is that price communication in the spare parts business in machine manufacturing is a sensitive topic and must be viewed in a very differentiated way. It starts with the type of price adjustment. For example, a price reduction is a very good way to polish up the company's image – after all, customers perceive you as a fair provider whose pricing policy does not only know one direction. Why shouldn't this be communicated consciously?
The situation is different with price increases. Here it is important to argue carefully and make it clear why the spare parts prices have been revised upwards and what added value the customer still has from the price increase. In the end, the goal is to create an understanding among customers of the changes that have been made. This includes various aspects and starts with the right choice of words. It is particularly important to communicate openly about changes in the pricing strategy, for example if you have switched from the previous traditional surcharge calculation (e.g. cost plus) to market-based pricing in the parts business. The goal should be to present price changes as a necessary response to market conditions, rather than as an arbitrary increase.
In other words, the basis of any successful price communication is a deep awareness of the needs and expectations of customers. Machine manufacturers should actively work to build and consolidate trust, for example through targeted price reductions for frequently used wear parts. Other confidence-building measures can be price promises for certain product categories or ensuring the supply of spare parts for older machines.
The way in which price adjustments are communicated must be carefully tailored to the situation at hand. In the case of price increases, restrained communication is recommended, while one should inform people about price reductions on one's own initiative. In any case, it is important not to speak of "price increases" and "price reductions", but of "market-based price adjustments". This formulation underlines that the prices were calculated based on current market data. This sharpens your profile as a reputable provider that is not overpriced and clearly distinguishes itself from low-cost providers. After all, the machine manufacturer can rightly charge more in certain cases, for example because it also provides technicians for the installation of complex spare parts and guarantees an additional warranty.
If customers request spare parts prices without an online shop and receive an offer or an order confirmation, the communication of adjusted prices should primarily take place in the written offer.
Many companies now do without maintaining price lists. The prices of individual parts change irregularly and without notice, which is especially common in online shops. Web shops for spare parts react to price adjustments in a similar way to other online retailers: prices are continuously updated as customers compare the prices of different online shops. To remain competitive, it is important to adjust prices accordingly. Online shops are therefore an easy way to communicate market-based prices for spare parts.
Large customers often request price lists and compare them with previous lists. Explicit communication of price adjustments is only advisable if prices can be compared at shorter intervals.
Machine manufacturers must therefore develop a strategy that ensures that price adjustments reach the customer. The information should be easily accessible to the customer, for example through pop-up windows in online shops, as QR codes on documents or as separate attachments to offers. Internal and external communication should take place immediately before the implementation of the price adjustment.
Important: The communication of price adjustments must always focus on the added value that the company offers – especially in the case of price increases. Arguments include, for example, excellent field service, extensive know-how or shorter delivery times. The ability to supply spare parts for older machines can also be "sold" as an additional benefit. Customers are more willing to accept higher prices if they get better service in return.
Another challenge is getting the right message across to the right person. Identifying the right contact at the customer’s organization is crucial, as tailoring your message to their role ensures greater impact. Service managers, buyers, and sales representatives, for instance, each view price adjustments through different lenses, requiring a customized approach for effective communication.
Basically, there are three questions for both internal and external communication:
Internally, price adjustments should be communicated by the Head of Service. This makes the importance of this strategic decision visible and comprehensible for all areas of the company.
Internally, all people with customer contact, for example key account managers, agents, branches, sales staff, service technicians and marketing.
All employees with customer contact should be informed about the price adjustments at the same time. Afterwards, they receive the most important contents again in written form (protocol). This ensures that "one voice is spoken" and that the customer does not receive contradictory statements.
Externally, you should only explain to the customer in the event of queries that the price adjustments are based on current market price research, as already mentioned.
In the case of price reductions, on the other hand, proactive communication with all recipients of offers and order confirmations at the customer is recommended – immediately before or at the latest after the price adjustment. Various communication channels are available here. These would be, for example, emails, personal conversations, web/online shops (e-commerce), newsletters, the company's homepage and annual price lists. For example, for large customers who regularly purchase spare parts, providing updated price lists is an effective way to communicate price adjustments while maintaining the relationship.
Negative reactions to price increases should be taken seriously and examined in detail. The goal of the communication must be to explain the adaptation to the market level in a plausible and comprehensible way and to emphasize the high quality of service. Employees must be trained accordingly.
These strategies aim to strengthen the customer relationship, build trust and highlight the added value of your services, even in situations of price increases.
It is advisable not to start the email directly with the price increase. Instead, the quality of the spare parts should be prioritized and their continuous maintenance at the highest level should be emphasized. An alternative way to get started is to highlight the business relationship. By emphasizing the customer relationship and the company's position, the machine manufacturer can present itself as a reliable business partner whose products have always been worth their price.
After the positive start, the announcement of the current price adjustment can be continued. It is important to state the exact prices. A combination of price increases with price reductions and other general adjustments and updates can lead to a more positive representation and perception by the customer. It is advisable to combine several updates and adjustments at the same time so as not to repeatedly burden the customer with adjustments and the associated price updates on their end.
The next section should explain the reasons for the price adjustment. A comprehensible explanation for price reductions or increases promotes customer acceptance. The most common reasons for price adjustments include:
Finally, it is advantageous to mention other improvements related to the price adjustment and to present the customer benefit of the adjustment.
Customers value fair, market-driven prices that reflect current market developments. This argument can be used to justify price adjustments in both directions, provided that the prices stand up to a market comparison. Making a price promise for this can serve as a decisive sign of trust and underline the appreciation of the customer as well as the company's image.
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As a machine manufacturer, those who take these three pillars into account do not have to fear price increases but can use them as an opportunity to consolidate customer relationships and stand out from the competition. Because at the end of the day, a satisfied customer is worth more than a short-term profit – and a loyal customer is willing to pay a higher price if he knows that he will get top service and quality in return.
True to the motto: If you buy cheap, you buy twice - and if you are treated fairly, you stay!