You Deserve Higher Prices
Article posted on 3rd December 2005
You may have already heard me bang on about higher prices - but it merits repeating!
These days simply no one is in business who is mediocre or average - just to stay in business you have to be very good at what you do. If you are very good at what you do in my opinion you deserve higher prices.
I can remember a time when we put up prices 2% per month for a period of 18 months and you don't forget something like that! It worries me today that the climate I find just about everywhere in the world is a mindset of price reduction or discount. I think it all started with the American auto industry, but I believe we need to change our mindset.
I worked for the large UK conglomerate BTR when it was a highly successful company and that success was often put down to their annual "profit plan" process. This involved a visit to London and a forensic examination of your proposed budget for the following year by the great Sir Owen Green and his team. Sometimes he would do a "Columbo" on you; you would be about to leave after a two or three hour grilling, with your hand of the doorknob had a smile just starting to form on your lips and he would say "just one thing, what would happen if you put your prices up 1% tomorrow morning?". You might think for a moment and then say "I suppose not a lot really", and then he would say "well we'll do that then shall we" - and immediately you'd have an even higher profit target to meet the following year!
However, I think it's a perfectly fair question and it's one that you should ask yourself - "what would happen if you put your prices up 1% tomorrow morning?"
Successfully running businesses and successfully growing businesses is all about having the courage to take risks. I think putting prices up is one of the least risky decisions you have to make to improve the profitable growth of your business. Just do it!
It does of course depend on the business you are in - if you have fixed contracts with major customers at clearly agreed prices there is perhaps little you can do with them, but most of us have a long "tail" of customers who buy from us infrequently or at low order levels. There must be something you can do with them by way of increasing the nett prices they pay. Don't forget - you deserve higher prices!
© 2005 Roger Harrop
