Make Sure the Price is Right

A recent case we saw highlighted an important factor that many businesses seem to be overlooking in the current environment, getting their pricing right.

In this case, we had a business owner who was struggling. They were unable to get the staff they needed to properly services their customers and due to increases in some input costs, they were also losing money on the work they were doing. This was obviously creating a lot of stress, and they were looking for a solution that would get their business back on its feet. They were just looking in the wrong places, spending all their energy focusing on how to get more staff and trying to find places to cut costs, when the real solution lied with their pricing.

By increasing their price, they could bring their core service offering back to a healthy profit margin and while this was going to result in the loss of some business as the more cost conscious customers went elsewhere, they didn’t have the staff to service all of their customers anyway. This approach resolved both their key challenges, mitigating the need to hire more staff, and returning the business to profitability.

As input costs, interest rates and wages continue to rise, it is important for business to regularly review their pricing to make sure that they are both making money on what they sell, but also are maximising the profit they are making with the resources they have available. Getting pricing wrong can mean working too hard for little or no reward. Unfortunately, I’ve encountered more than a couple of business owners recently who had completely overlooked pulling there price level as part of their response to the current challenges.