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How to Raise Your Prices

(September 2012) posted on Tue Aug 21, 2012

"Regardless of whether you believe we have officially managed our way through the recession or not, one thing is clear: It’s more expensive to do business now than it was a couple years ago."


By Marty McGhie

During the course of the past few years, most of us have had to deal with the struggle of increasing costs to our business all while we fight our way out of the past recession. Regardless of whether you believe we have officially managed our way through the recession or not, one thing is clear: It’s more expensive to do business now than it was a couple years ago.

But despite the hikes we’ve experienced in the cost of doing business, few of us have felt all that comfortable going to our customers with price increases. As a result, we’ve seen our profit margins continue to decrease.

It’s unrealistic to expect that we can sustain this downward profit trend for much longer. It’s time to reverse the wheel, and get our profits trending back in the right direction – by managing to increase our prices, while continuing to maintain customer satisfaction.

On the rise
Whether our company’s profits were up or down, our cost of doing business seemed to maintain a steady pace during the recession. Interestingly, nearly all of our suppliers held the line on prices during even the worst part of the recent recession. Like us, they were fighting to stay in business and couldn’t afford the risk of losing customers to price increases. In the past year, however, virtually every one of our suppliers has raised prices at least once; some have done so two or three times. So our shop’s material costs clearly have increased, and I suspect that you have found yourself in the same position.

Likewise, labor costs in our industry also have increased substantially. Good employees are now much more willing to move around to look for better paying jobs. And in spite of national unemployment numbers still being relatively high, the fact is that securing a solid employee for your business will now cost you more money. While it was easy to justify salary and wage freezes in 2008, 2009, and even into 2010, by now most businesses in our industry have given raises to their employees. Many have even given multiple raises to their valued employees as a reward for sticking with them through the tough times (and to help retain those employees).

All of these cost increases beg the question: Why are we willing to increase our costs of doing business but reluctant to raise prices for our own customers?


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