When Was the Last Time You Reviewed Your Pricing?
By Tina Zawila
Rising fuel costs, higher interest rates, increasing insurance premiums and the ongoing challenge of attracting and retaining good team members are putting pressure on businesses across every industry. Yet despite these rising costs, many business owners continue to charge the same prices they charged one, two or even three years ago.
The result? Shrinking margins.
One of the most common observations I make when working with business owners is that pricing is often reviewed far less frequently than costs. Expenses seem to increase automatically, while price rises are delayed because owners worry about losing customers.
However, the maths tells a powerful story. A modest increase in pricing can have a significant impact on profitability, often far greater than trying to win additional customers or generate more sales volume. Conversely, discounting can quickly erode profits and force a business to work harder simply to stand still
But pricing is about far more than covering costs.
At our recent Business Ignite workshop, we discussed the difference between cost-based pricing and value-based pricing. Many businesses calculate a price based on labour, materials and overheads, then add a margin. While understanding your costs is essential, customers don't buy your costs. They buy outcomes, solutions and peace of mind.
The businesses that achieve the strongest margins are often those that can clearly articulate their value. They help customers understand the problem being solved, the risk being reduced, the time being saved or the opportunity being created. When value is clear, price becomes only one-part of the conversation.
My challenge to business owners this month is simple: review your pricing. Understand your margins. Consider how costs have changed over the past 12 months. Most importantly, think about whether you are clearly communicating the value you provide.
Because in business, it's not always the busiest businesses that succeed. It's the businesses that understand their numbers, price with confidence and deliver genuine value to their customers.
If you need help reviewing your pricing or any other business management advice, call our professional team at UHY Haines Norton CQ Pty Ltd on 4972 1300.
