I recently renewed my home insurance.
The price I was quoted was just slightly higher than the premium I paid last year. It didn’t seem like a big jump, so I signed on again.
Of course, most insurance companies do the same thing every year, raising their prices ever so slightly so customers pay more without a fuss. Over time, it can amount to a large increase.
Now, you might think I’m here to defend the consumer, and complain about how unfair this practice is.
I’m not. I think that the insurance companies are absolutely doing the right thing – and that you should similarly be raising your prices by small increments, relatively often.
Reality is that over time, most companies do need to charge more.
It’s not because you’re ripping off your customers, but because inevitably your outgoings change, what you offer changes, the market changes, the economy changes… All this affects your margins.
Sometimes you become more efficient and can actually charge less. But over several years, there’s a good chance you’ll need to adjust your pricing upwards if you’re going to stay profitable.
That raise is much easier to ‘sell’ to your customers gradually, in small steps.
I mean, imagine that one of your suppliers came to you after 10 years, and told you they were doubling their price because their margins were now so tight. You’d balk and they’d lose you as a customer. If enough customers said “no, thanks,” they could end up in serious financial trouble.
But by spreading the pain, they can do what they need to survive and thrive financially (the main job of a business, after all) while keeping their customers happy.
That’s why you need to review your pricing every year, to double-check you’re charging enough. Or preferably – do this exercise every 6 months!
It’s just good financial management.
That’s why it’s a routine part of what we do for our clients.
Our job is to help companies like yours maximise their profit. With our detailed financial reports, we can see clearly when your margins change – no guessing or relying on “gut feeling”.
And we can use that same in-depth financial information to decide the appropriate price rise and to forecast the impact on your business if you change your pricing, so that you make a well-informed decision.
Ready to bring world-class financial management to your business, so that you can grow from £1 million or £2 million turnover to £5 million, £10 million – and beyond?
Just email or call us on 01279 647 447 to get in touch today.
Warmly,
Garry
