When was the last time you reviewed your prices?
Not glancing at your competition websites, or asking “am I charging too much?” on a forum, but actually, sat down and did your own calculations?
It’s easy, especially when you’ve been running for a while, to let swathes of time pass assuming you’re still covering your costs based on your calculations a year or two back – or was it three…? With a raft of running costs potentially increased over the next few months, it’s worth probably having a quick tot up again to make sure you’re not working solely for the love of the job…
Fixed costs – These are the things that don’t change from day to day. Your rent, your energy price, your own personal costs – yes these matter too, because you need to earn enough to pay your own bills as well as the business! In the last week, energy caps have risen for domestic homes, adding hundreds to the household bills. Couple that with the fact your business energy rates have no such protection and you could well find yourself having to move a decimal place on your annual energy costs…
If it has been a while, you can download and use our Fixed Cost calculator to work out your daily outgoings.
Variable costs – Chemicals, accessories and tools have all taken a jump in the last few years, with nitrile gloves still retailing at triple their pre-pandemic price, import and shipping costs worldwide adding to retailer bottom lines, and raw materials in short supply across the board, your chemical prices alone could have risen by up to 30% in the last year alone! The simplest trick to using less chemicals is to use the correct dilution. The cumulative economic effect of correctly diluting chemicals – either to ratios or PIR – over “an inch in the bottle and top up with water” can be vast and make your overheads much leaner.
Employee costs – In 2022, the national living wage rose, along with (at the time of writing) employers’ NI contributions, and insurance costs (which rise every year commercially…) If you factor these costs into quotes too late, you’ll be undercharging come due time.
Nobody likes raising prices. Some see it as being uncompetitive, others fear they’ll lose customers who are already tightening their belts.
All completely understandable.
However your business also needs to survive, so running at a loss, or as a charity, is unsustainable. One way to mitigate rises is to enable customers to spread payments using pay later services, though many do not agree with these models as they encourage debt accumulation.
Other suggestions would be to encourage those occasional customers to book regular slots for a discount – however, if you have a full calendar already, more work isn’t going to alter your end of the month without taking on more help to manage.
There isn’t a simple answer, and each business needs to deal with these pressures in whatever way sits most comfortably with them. But don’t let it come as a surprise. Work out your costs and revisit them regularly, and if it ends up costing customers more, unfortunately – that’s inflation…