Pricing is an essential business skill – so why are so many of us afraid to increase our prices?

You’ve got a fantastic product, You can sell it brilliantly. Now you just need to price it superbly…

Until recently, that third aspect didn’t cause business owners too much trouble.

Because, in truth, inflation has been so low, many companies haven’t changed their prices for years.

But now, rampant rises in the cost of fuel, wages and materials are forcing business owners to rethink that.

And for many, that brings trepidation. Even fear. So, how can you increase prices without putting customers off? And is it really worth it, or could you simply cut costs instead?

On our upcoming Business Excellence programme, Pricing with Purpose, business expert, Mark Prince will share:?

• Why price increases are the most effective means of increasing profitability
• How to identify the right cost strategy for your business
• How to confidently put up prices without losing clients

The programme is part of the Lancashire Forum and is delivered online over three half-days. It’s fully funded, to help Lancashire and Cumbria SMEs become more profitable by confidently taking control of their pricing strategy.?

Find out more and register online.

Why price hikes are the new normal and why so few of us are skilled in implementing them…

?You’re an SME owner or director and you’ve decided you have to increase prices.

After all, everything from fuel to wages is costing you more and, at some point, you’ve got to pass it on.

What are your first feelings?

• Confidence! Selling higher prices to customers will be easy and the result will be increased security and profitability for the business
• Apprehension. Clients might run a mile. Maybe you’re a little stressed out too – that change is going to create a lot of admin

As so many business owners are being forced to review, many will find the latter rather familiar (share your feelings in the comments).

That’s because most people under a certain age – who have joined the world of work since the 80s – have no real experience of cost increases. As a result, it feels difficult and stressful, so we shy away from it.

But how can a whole generation of businesspeople have no experience in cost increases? Here’s how…

An era of rampant inflation and price hikes

Back in the 70s and 80s, pushing up your prices was, a bit like smoking in the office, part and parcel of doing business (thank goodness for some changes).

Even if we didn’t experience it first-hand, many of us will have heard how interest rates hit the high teens in both decades.?

Businesses couldn’t just suck up these kinds of cost increases. They had to learn how to incorporate years of fluctuating – and mostly growing prices – into their business practices.

Owners and managers honed the skills to implement price changes: quickly calculating the effect, selling the change to clients, and rapidly adjusting rates on shelves and in warehouses.

Then all that changed

The 90s brought a steady decline in inflation rates, which have eventually bumped along close to zero at times since 2000.

But why the decrease? ??

These factors and more had a downward pressure on prices…

• Supermarkets pushed into every town, driving down the cost of food
• Fewer restrictions on migration led to cheaper labour
• The internet reduced the price of many goods
• China’s growth allowed businesses to outsource manufacturing for less
• The power that trade unions had in the 70s dwindled, and, as the power shifted to employers, wages stabilised
• The expansion of the big DIY chains made home improvements affordable and achievable

Now, take another look at that list

• Spot some areas where that pressure is releasing?
• The internet is no longer a place for knockdown prices,
• Reduced freedom of movement has curtailed the stream of cheap labour coming to the UK,
• and China’s eyes have turned increasingly towards focussing on higher-end manufacturing rather than cheap, labour-intensive goods.

Add in the rising cost of gas and fuel and we’re heading right back into the inflationary environment of the last century.

We need to adapt, and fast

These are all major factors – certainly not blips that will be going away any time soon.

We are entering a new normal (yes, another one).

So, if you’re in business, there is no shying away from it. ?It’s more than likely that you’ll soon be increasing cost and you need to learn how to confidently, efficiently and effectively do that.

Pricing strategies: choose carefully, implement confidently

A key step in adjusting prices is to identify the right cost strategy for your business, from cost-plus to market-led, there are a plethora to choose from.

Another essential skill is communication. How will you pitch this change to your customers, bringing them onside?

These are all major questions and the answer is very much dependent on your business, your customers, your market and your product.

Fortunately, fully-funded, expert business advice is available via a Lancashire Forum programme, delivered by us at LUMS.

Our upcoming ‘Pricing with Purpose’ programme is designed to help the owners and directors of Lancashire and Cumbria SMEs to break down the barriers to implementing price changes. ?

Delivered by business expert Mark Prince, the programme will explore the different types of pricing strategies and which can work best for your business.

You’ll analyse your current processes and ultimately gain more control of your business finances which can lead to bigger profits.

Get fully-funded support to become more profitable

Pricing with Purpose is delivered online via three half-day workshops and is designed to be short, practical and impactful.

It’ll give you the time to step away from the day-to-day running of your business and reflect on your strategy – moving from making ends meet, to helping your business thrive.

It’s fully funded for eligible small and medium-sized (SME) businesses and is highly interactive to help build meaningful relationships with fellow business leaders.

Our next programme starts on 28 June.

Find out more and register online.