Well quite a lot actually.  Milk has always been one of the goods used as an indicator of the overall cost of a household’s food shop.  An increase in milk as an indication of an overall increase in food.

We go through quite a lot of milk in our household.  With two children (one of whom likes porridge every day) and a coffee drinker, we would be averaging a litre every 1.5 days at best.  Suffice to say I keep an eye on the price of it.  So you can understand my dismay when in the first shop after Christmas I noted the price of milk had increased from $1.99/L to $2.19/L.  Now, on the face of it, this isn’t a massive increase, but when you consider I was buying 10L of the stuff, it begins to bite.

And it doesn’t end there.  The cost of apples has risen $1/kg when compared to this time last year, plums are $3/kg more expensive and the list goes on (fuel was up 10c/L yesterday).

Inflation and the impact it has on our daily lives is very much here, alive and well and biting far more so than many of the economists would like us to believe (after all, we live in the real world!).

So what does that mean for the pricing in your business?  Are you absorbing the additional costs and watching your profit (and livelihood) dwindle away?  Or are you passing on these additional costs?  Perhaps you feel a little like a rabbit caught in headlights.

As a business advisor we say increase your costs.  You did not start your business to run a charity, and given the amount of risk you have taken to run the business, employing people, contributing to the economy, you deserve a reward, not the sleepless nights and stress of struggling to pay your ever-increasing outgoings.

“But”, you might be saying “I will lose clients if I raise my prices”.  It is a fact of life that some part of your client base will see you only in terms of the amount you charge (and they will only want to pay the bare minimum), but a vast majority of the people you provide services to, will value you and the service you provide a great deal and as such will understand you need to charge enough to be paying your bills comfortably.  That means when costs go up, your fees need to too.

Are you limited to one price increase a year?  Absolutely not! Remember, you need to charge what is necessary to cover your expenses and make a profit, if that means you need to review prices more often than once per year (because let’s face it, you don’t have a crystal ball), then that’s what you need to do.

It’s worth remembering, that without such price increases, there may not be much of a business left to run, leaving your hard work in the gutter.

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