Business Mentor: How small businesses can manage price increases

Armando Bartolome

Posted at Apr 23 2022 09:51 AM

We need to be wise in selecting the products that we use, particularly when most of the prices have increased. These challenging times have made consumers more vigilant about how they choose the products they buy.

We showed resilience during the pandemic's height. We took whatever was available and made it work for our needs. But as the COVID-19 pandemic recedes, inflation has come to the fore. As input costs increase, business owners also need to raise prices.

Retailers devise strategies to use to protect their profit margin. Increasing the price of a particular item should be done within a reasonable range so it will not scare customers away. 

For small retailers, this can be tricky. So, how do small retailers make that move of increasing their profit margin without harming the relationship they have with their customers?

1.    Assess profit margin 

It is crucial always to check your suppliers' prices because you base your product’s price on the cost of inputs and other factors. You may think that you are still paying the same amount when your suppliers have actually increased prices. It is one reason businesses fail – business owners suddenly notice that their profits have decreased.

2.    Offer an alternative 

Introduce a new product line that has almost the same quality as your original products but costs less. This should not mean offering a low-quality product, but rather, providing a more affordable for your target market. You can decrease the quantity, have different packaging, or use similar raw materials but at a much lower cost. 

By using this strategy, you not only increase the number of products that you offer, but more importantly, you are offering your products to a new market.

3.    Understand the needs of your customers 

If you intend to increase the prices of your products, it would be best to know how much it would impact your customer. Instead of selling at a very high price at once, dividing the price increase into increments can be helpful. Business owners should never be afraid to talk to their customers to know their wants and needs. 

Know that when price increases, demand would decline. Especially now that consumers spend their real-hard earned money wisely. 

We know that change is inevitable, including the prices of every product available in the market. In providing excellent quality products and services, consumers should be able to decide on which of the different brands are truly worth their price. 

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For more information, you may contact Armando "Butz" Bartolome 
by email: business.mentor@butzbartolome.com
FB Page: Butz Bartolome
website: https://www.butzbartolome.com 

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