Sadly this kind of strategy is the same one that the company I work for introduced many years ago. They had accounting software tell us what to do. The accounting software doesn’t take business relationships in to consideration. The company Introduced price increases of 7.5% every year for the past 5years. In 2017 we were turning over approx 170000 per month. From April 2021 we have struggled to get over 30000 a month. I imagine the first year looked great so they continued using this logic. To date, we have less than 5% of the customers we had 5yrs ago. of course this video is based on small businesses and what I have described is based on our industry and custom but it is important to know that a price increase will help out short term until your customers get wise to it and then they will go somewhere else. I understand every industry is different. We also started to combat the loses by getting rid of assets. We stopped stocking as much spare parts which was 65% of our turnover, we let people go etc etc. We now have the smallest market share in our industry and we are the OEM. We also add quite significant value to our services but this weighs up to nothing because the prices are so high we can get in the customers door to show them the added value. Big rant over lol really sorry. Im a subscriber and enjoy the videos very much but, this price increase chat always annoys me as I’ve seen first hand the effects over a half decade while utilizing it.
Hi Davy, It for sure needs to be considered with many factors. Most small business barely review prices at all, so most of audience I am talking to have probably never really attempted it! As I’ve mentioned in lots of content I’ve done about the current state of the small business world, I’m actually against standard blanket rises for many of the reasons you suggest. Aim of the vid is to at least get people considering it, and certainly not lowering them in a mid guided belief it will help the bottom line.
Thanks again for another amazing informative post, these posts help more businesses than you could ever emagin, sometimes a small business like myself can be busy with the challenge of the moment and these that seem obvious can be overlooked and at year end the horror of this coming to light, thanks again for sharing these posts
Hi Mike, thats great to hear it's useful! I think business owners are always so busy as you say, it can creep up on you in a few months time when the cash is looking tight.
Sadly this kind of strategy is the same one that the company I work for introduced many years ago.
They had accounting software tell us what to do. The accounting software doesn’t take business relationships in to consideration.
The company Introduced price increases of 7.5% every year for the past 5years.
In 2017 we were turning over approx 170000 per month.
From April 2021 we have struggled to get over 30000 a month.
I imagine the first year looked great so they continued using this logic.
To date, we have less than 5% of the customers we had 5yrs ago.
of course this video is based on small businesses and what I have described is based on our industry and custom but it is important to know that a price increase will help out short term until your customers get wise to it and then they will go somewhere else.
I understand every industry is different.
We also started to combat the loses by getting rid of assets. We stopped stocking as much spare parts which was 65% of our turnover, we let people go etc etc.
We now have the smallest market share in our industry and we are the OEM. We also add quite significant value to our services but this weighs up to nothing because the prices are so high we can get in the customers door to show them the added value.
Big rant over lol really sorry. Im a subscriber and enjoy the videos very much but, this price increase chat always annoys me as I’ve seen first hand the effects over a half decade while utilizing it.
Hi Davy,
It for sure needs to be considered with many factors. Most small business barely review prices at all, so most of audience I am talking to have probably never really attempted it!
As I’ve mentioned in lots of content I’ve done about the current state of the small business world, I’m actually against standard blanket rises for many of the reasons you suggest.
Aim of the vid is to at least get people considering it, and certainly not lowering them in a mid guided belief it will help the bottom line.
Thanks again for another amazing informative post, these posts help more businesses than you could ever emagin, sometimes a small business like myself can be busy with the challenge of the moment and these that seem obvious can be overlooked and at year end the horror of this coming to light, thanks again for sharing these posts
Hi Mike, thats great to hear it's useful! I think business owners are always so busy as you say, it can creep up on you in a few months time when the cash is looking tight.
Useful one for teams so they know the impact to the business.
Glad you found it useful Baldeep!
That’s really interesting thanks. What software is that?
This is internal software we use called 'Simple Stuff that Works'. We can licence to clients but we usually use as part of a service with them.