Prices are on the rise – are you passing these on?

The price of everything is rising fast; the stories are everywhere, if you listen hard enough. The price of wood is now 64% more than it was a year ago, fuel prices are going up 5p a day and minimum wage is going up to £9.18 from April 2022, a 9.8% increase.

All of this adds up to an inflation rate of around 5.5%.

With all these costs rising, it stands to reason that your prices will have to increase, just to maintain your profit levels. But we have found that many of our clients are unwilling to raise prices out of fear of losing customers. This means they are being squeezed from the top and the bottom.

It is important to remember that:

Now is a good time to justify a price increase

The rise in living costs has been well publicised, so people are expecting some pain. Justifying price increases is important to make sure that customers understand your reasoning so, it could be argued, that now is a good time to justify an increase.

You may not be worse off

Even if you do lose custom from raising prices, then as long as you lose less than the % you raise prices by, you will be better off.

For example, a 10% price rise that loses 5% of custom means you are in a better position.

Higher prices attract better customers

Customers who buy from you because you are cheapest will always treat you as such. These won’t be good customers and I guarantee they won’t be the best payers. So, pricing positions you in the market. In short, higher prices attract better quality customers.

Profit will be maintained

When you are not making a profit, your cash will also start to dwindle because losses must be paid for. So, raising prices when costs are going up is essential to keep the ship afloat and maintain the profit margin and ultimately, the cash in the business.

Taking the Risk

Running a business is all about taking risk and raising prices is a risk, but in this current business environment it is one that needs to be taken. To minimise the risk, you could try and raise prices on certain products or services and not the whole offering.