A colleague of mine who is in the medical device industry had a question. He wanted to know how others in his field were going to deal with the upcoming 2.3% excise tax that Obamacare was instituting on medical device makers effective January 1, 2013. Were people going to absorb the tax, increase the price of the product, or add a line item to all bills specifying “Excise Tax” with its amount?
My thoughts? Forget about just “absorbing” the cost in your margin. Your margins are likely already thin. And do not simply increase the price of the product. Even if you tell customers why when you make the price adjustments, that message will quickly be forgotten. All they’ll remember is that you increased the price when they “didn’t have the money to spend.” (Just ask them.)
This increase in cost to the end-user is due to a new tax. Call it that. It will put the “blame” for the added cost squarely where it belongs. It will remind buyers that the government is responsible for increasing their costs, not you.
But don’t stop there. Take this opportunity to create a “thought leadership” platform in the industry.
Get in front of this issue. As you prepare your customers for the coming tax and the increase in their costs, express your concern about price containment. Use your marketing, sales, and content materials/channels to let your clients know that you understand the challenges to their success in your industry. Reinforce your commitment to keeping prices reasonable. Stress what you already do to accomplish that. Emphasize all the things you do to add value and create a long-term reward in doing business with you.
If you can, offer new content that provides clients with ideas to reduce costs, work smarter, or enhance the overall “Value ROI” they receive when working with you.
Your goal is to show your customers that you “get them,” and that you stand with them so they can deliver the best product and service possible to their clientele.
This approach works in a variety of situations across multiple industries. Negative events occur and businesses must adjust. How we show our compassion and support for those we serve, our customers, goes a long way toward building a long-term, win-win relationship with them.