Are You Late….. Raising Prices….?

Published Articles
Published in

American Printer

on Tuesday, April 25, 2017

By Sid Chadwick, Chadwick Consulting, Inc.

“Let fear be a counselor, and not a jailor.”…….Anthony Robbins

INTRODUCTION:
About half a dozen clients over the last six or so months --- have provided themes of recognizable evidence --- that they were selling at prices --- “below market”--- while print demand --- is increasing.

ObservationsFactual --- and circumstantial evidence --- of “below market pricing” was represented by some combination of the following:

  • An increasing number of customers did not require a quote --- before sending their supplier the work they wanted produced.
  • Sales Reps were winning a steadily increasing percentage of work --- that provides “bonus commissions”.
  • Your Quote Hit-Ratios --- are higher than the previous three to four years."Some were as high as 60%+."
  • Your company is increasingly running on weekends, but profitability does not seem to increase. In fact, profitability seemed --- too often --- to be slowly slipping.) "A few clients are running every weekend --- and barely making a profit of any substance. (Guess why...!)"
  • On Customer Surveys, there are almost no criticism of “Competitive Pricing”.
  • Growing customer demand seems to be calling for additional investments in equipment--- to keep up with serving demand, but profitability does not justify the investments.
  • You "track" the number and percentage of ‘last looks’ from buyers that your Sales Reps receive --- and it seems to be steadily increasing --- for winning more work.
  • Employees have not received meaningful pay increases in several years. This condition is especially true for your most valuable employees.  Over recent months, you’ve watched valuable employees leave your company --- maybe even leave the industry --- for better paying positions, with better benefits. Yet, your lack of profitability won’t stand much of a pay increase for your valuable employees. Previous benefit levels have not been returned.
  • Generally speaking, alterations, storage, and lots of other “extras” --- tend to be “freebees” --- that aren’t even shown on the invoice for their value --- that wasn’t charged. (It all adds-up.)
  • You aren’t paying yourself properly…and/or….You aren’t charging the going rate for rent, though you do own the building.

dollar sign

Suggestions for correcting this unhealthy condition…?

  • Raise pricing 3-5% --- immediately, and track carefully if you start to lose --- or continue to win --- customers work.
  • As you probably won’t experience any radical change in work booked, raise pricing another 3-5% --- after 60 – 90 days.
  • Repeat “one” and “two” --- until real resistance is experienced.
  • Begin examining profitability of all jobs --- and notifying customers of modest price increases on specific future work --- as you identify specific jobs and margins that are not healthy for your organization.
  • If you’re working six and seven days a week, work to lose your lowest margined customers --- let’s say 10% of your revenues --- and especially those with low margins, and who are slow to pay their account with you. On accomplishing this, your company is most likely more stable, and more valuable.

SUMMARY:
We get “sucked-into” fear of losing a valuable customer, who is tough on pricing from suppliers --- though they expect the best of all that you can provide. That pattern too often --- becomes habit --- for all customers.

What are your objectives of where do you want to be in six months --- in terms of improved profitability, and improved morale of your employees….?

Improved clarity of our objectives --- seems to always assist with developing a written plan --- that supports those objectives. 

“He who desires but acts not, breeds pestilence”…….William Blake