Don't be scared of price increases
David Cottrell
Managing Director with 30+ years experience in International Business Improvement.
OK.
No way to avoid it.
Margins are under pressure and the only solution is a price increase. Letters have been issued to smaller customers and a succession of meetings are set with your most important buyers.
Just take a look at the maths and stop being so sacred.
Lets say you charge $1000 for your goods/services and you make 10% or $100 profit on each sale.
You have 100 customers (I'm keeping the maths simple!) and this gives a total profit of $10000.
Nice but not enough. You have asked for an increase of 10%.
Your new, post-increase price is now $1100. This gives a new profit of @200 per sale.
How many customers will you need at $200 profit in order to earn the same total profit figure? Answer: 50 or just 50% of your existing 100 customers.
You could lose half of your customers and still make a similar total profit AND have more time to hunt for new customers that appreciate the value you create for $1100.
It will still be hard work but this simple calculation shows that there's nothing to be scared of.