Putting up the price for what you do to increase your profit is baulked at by most business owners I suggest it to.
No doubt it's because they fear the reaction they anticipate from their customers. Or they fear losing them completely.
But when you've cut costs as much as you can and cannot add more sales to the top line what is there left to do to increase profits?
You could buy new equipment, hire more staff or increase your stock to help drive sales further but these would eventually result in having to change prices to maintain the same level of profit. Additions come with additional costs.
It takes guts to increase your price as what you're really doing is saying: "I'm worth this much now and you, as my customer, are going to pay more."
But think, when was the last time a customer complained about your price. And at what rate?
You'll probably find that for 99 per cent of your customers price is not an issue. And new customers will not even know any different.
You'll also find that just a 10 per cent increase can make a difference to your profit line.
Two independent studies have concluded that even a one per cent increase in price affects a company's profit more than any other change. A pricing change can yield the best return.
Do the maths and look at different scenarios for your pricing, calculate the difference it makes to your bottom line. Ensure you make a plan for pricing changes.
Most of the time complaints for most businesses aren't about price, anyway. It's usually about lack of service and benefits. Customers want more than just buying a product or service. They want the benefits that they can offer.
Everything else changes - interest rates, products, wages, law, weather - why then not look to change your price?
Jeremy Tauri is an associate at Plus Chartered Accountants.