Most UK businesses will be feeling the effects of the rising costs at the moment. If this is leaving you in fear, then you may consider adjusting your prices to keep up. Before you take this step be sure to look at the following factors and make an informed choice.
What has caused the crisis?
The UK is facing a unique set of problems. The main reason we are sitting in a cost of living crisis is that high inflation is outstripping wages.
This is further complicated by issues such as include labour shortages, rising fuel costs and additional taxes on households. And with National Insurance and Council Tax rises the strain is certainly being felt by some.
So what should you do before you adjust prices? Read on to find out more.
Understand your costs
You need to understand the cost of your business before increasing prices. If you don’t know what expenses are going into each product or service, then it’s impossible to make an informed decision about changing them.
This can seem like a stressful task as you must get it right, so perhaps look into using a local accountant if you don’t already have one. This will ensure that all incoming and outgoings are accounted for and they will be able to offer financial advice to calm your anxieties.
Study your competitors
The current climate is tough for all businesses, so if yours has been getting more expensive, see what your competitors are doing to cope. Are they increasing their prices? Are they warning their clients? If other businesses in your industry are also raising their prices, then your customers shouldn’t be too shocked to see that you have also raised yours.
Approach new customers
Approaching new customers who are new to your prices, may work in your favour. If new customers react well to your increased prices, you’ll be assured that people are willing to pay the higher price for your products or service.
Communicate with your customers
When raising your costs it’s important to be transparent with your customers. You wouldn’t appreciate seeing a sudden price increase in your bill, so don’t assume your customers will. To break the news to your customers, you can send an email to your subscriber list and even post on your social media to raise awareness. Be sure to give your customers enough notice so that they can prepare for this increase.
As long as you’re honest as to why you’re increasing your prices, your customers will understand. The rising costs in the UK are affecting everyone so it should be no surprise that there is a lot of pressure on businesses to also increase prices.
When will it end?
We can’t predict a specific date that this depression will end, however, The Bank of England’s governor has said that the cost-of-living crisis will likely last until 2024.
How Stones Accountancy can help
With Stones’ management accounts you have someone to turn to in support of your business. We can help you review your business growth and develop a cost-saving strategy to fit your business demands. We also offer full training and support in cloud bookkeeping which can be an effective tool and keeping track of your costs and expenses.
For more information contact us today for your free initial consultation.