Expert advice from Gordon Glenister, director general of the BPMA
Prices have increased since the Brexit vote last June and with continuing currency fluctuations and uncertainty over how we’re leaving Europe, there may be more increases to come.
One of the problems in running a business is ensuring that all the costs are covered. If you don’t move your prices up in line with your costs, it will affect your business. If you are under pressure to be more competitive, do all you can to hold them or increase where you can, but take time to concentrate on providing the service that your customer wants, and don’t simply act like a quote machine.
I am sure you’ve heard it takes the same amount of time to look at 10 T-shirt jobs as it does 100. Some companies have a set margin regardless of quantity, but this seems madness to me. They will add the same 35% to their costs on 10 shirts as they will on 100 T shirts, but the actual cash margin generated from the former is significantly less.
To me, price is all about value. When I had my own business as a distributor, I found myself having too many small customers and not enough big ones, so I decided to increase my margins substantially to those low margin and challenging customers.
I increased my margins to these two types of customers to 100% over a three-month period, and two very interesting things happened: I lost half of them, but the other half I retained, which more than compensated for the ones I lost. I also realised how much value they placed on me and my service: “Gordon will sort it out for me”.
I often have people say to me, “If I move my prices up, they will go elsewhere.” Trust me, a lot won’t. Have the confidence to do it.
If you constantly sell on price, it will be a spiral down to the bottom. Go get the clients you want and provide them with such outstanding service that they simply won’t want to go anywhere else.