Business

Increase prices at your own risk

Tired consumers who are already overwhelmed and angry with the rising prices of everything are starting to realize that it is no longer about supply chain congestion, excessive “free” money from the Fed, rising wages for “essential” employees, or the invisible but oppressive hand of inflation that makes their lives more painful and their wallets lighter. As much as Elizabeth Warren berates greedy business leaders and, as President Biden criticizes antitrust lawyers on them and the media dutifully intervenes, the root causes of the price hike are much more local in nature and much easier to explain. .

It’s not the Fed or Ford Motor or Dr. Fauci raising prices at the grocery store and cooking a meager meal at a local restaurant costs as much as good food in a fancy French restaurant. It’s Fran, your friendly pharmacist, and Harry at the hardware store, and even the guy from the bagel store down the street who makes sure your dollars don’t buy so much anymore. All the businesses in town are taking advantage of the ride’s room to expand, and no one wants the music to stop.

As the media begs you to shop local and Amex feeds small business Saturdays, the truth is, it’s not the Saudis or some nasty bogeyman, but the merchants in your neighborhood who are so addicted to the train. sauce to COVID inflation that they can’t seem to stop cheating on everyone and their brother whenever they get the chance. The “new normal” unfortunately seems to be “take as much as you can” while the gettin is good and before the goose that lays the golden eggs flies away. Price hikes, shortage allowances, pickups and deliveries surcharges and all kinds of other stuff are everywhere you look, and many are buried where you can’t even see them. More importantly, whether the business is large or small, each of them believes that there is no reason in the world to step back and cut prices.

But consumers have longer memories, a lot more alternatives and a lot less patience these days than these clueless mercenaries imagine. I expect – just like the world’s severely abused tenants who will soon be squeezing their pounds of flesh from the landlords who have done next to nothing for them during the two years of the pandemic – that once the dust settles, what a little of care, concern or loyalty that someone had for the small local business will be long gone. We’re going to see Amazon and Walmart vans going up and down the block all day, every day, for a long, long time.

If you want your business to be on the safe side of this particular nasty storm – morals aside – now is the time to carefully consider your own pricing and strategy for the future and do two important things: (a) make sure – make sure that numbers always mean something to your business and your customers; and (b) be sure to communicate and carefully explain the reasons for the price increases to your customers before you end up in the heap with all the other pigs who hope their regulars never get the hang of them. Most of the justifications and reasoning that worked during the intense early stages of the pandemic just won’t curtail it for much longer and companies are running out of excuses and people to blame. If you want to do better, make sure your explanations make sense. You don’t want to be the guy who blames the band for being such a bad dancer.

Here are the three most critical parts of the conversation.

First, a transaction is not a trade.

A transaction is a promise of solid value for a fair price. No conditions, no add-ons, no waits and no conditions. Nothing is expected in return – there is no consideration – no exchange of data, personal information, long-term commitments. If the price does not make economic and business sense to both parties, it will not create a real bond and a continuing relationship based on real mutual benefit, and therefore it is not worth doing. Of course, you are in business to make a profit, but only if you stick to your end of the bargain and deliver the goods. And, even today you still get what you pay for and if the seller isn’t paid enough – given their real costs and expenses – to provide a professional, high-quality product or service, then everyone else. world loses. It is not something to hide or dodge; it’s something you have to explain.

Second, a deal is not a one-off offer, a short-term deal, or a big favor.

While everyone is in a rush to get back to business as usual (fancy as it may be), there is no long term benefit in trying to quickly rebuild your business with gimmicks, clearance sales, discounts, “extra” money or points because: (a) a sales tip sends the wrong message about longevity and continuity; (b) consumers easily see through disingenuous attempts to reduce COVID-inflated prices simply by bringing them back to pre-pandemic levels as if it were some sort of substantial benefit to them; and (c) it is never smart to try to create volume and traffic just through discounts, as this causes your customers to buy on price rather than on brand or value.

Third, you only have one name, reputation and brand to bet on

Ultimately, your brand and reputation are neither fleeting nor fluid. These are promises of values ‚Äč‚Äčthat you undertake to respect all the weather. Honor never gets old – it’s always about protecting the worthy and important things that need and deserve to be defended no matter the cost. If you are not ready to stretch out for your clients and clients in the difficult times when all of these things are tested then these are not essential parts of your mission and goal, they are enjoyable hobbies. to brag about in good times. We all ultimately sell trust – even if it gets harder and harder to do with each passing day – and people need to see that we can be relied on and counted on to act honorably and appropriately. in good times and in bad times because it’s the right thing to do. Customer trust is hard to gain and easy to lose.

And, to be clear, your decisions and behaviors are also observed and evaluated every day by your own employees – they are customers and consumers too. The very last thing your business can afford is to lose confidence in yourself and what you are all trying to accomplish. Today’s best employees want to do a good job, genuinely want to help others, and want to be proud of the way they do their job and the results. Your customers will never be happier than your most unhappy employee.

The opinions expressed here by the columnists of Inc.com are theirs and not those of Inc.com.

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