Video Transcript

Knowing when to update your pricing is tricky. You have to balance your margins, your revenue, all kinds of things. But the decision often ends up becoming emotional. Does the perceived value of our product or service warrant raising the price? Are people just going to stop buying? Are our customers going to start blasting us on social media?

And you get overwhelmed by fear, rather than just making the decision to update your pricing when you need to update. When times are tough — recessions, COVID, supply chain, all of the above — the longer that you wait to increase your prices, the worse that it gets.

Some people wait and they try to gobble up market share by really absorbing the fact they should have raised their costs and they didn’t. That’s a mistake. It’s only going to hurt your business in the long run. And your competitors who have raised their prices and gone along with the curve or gotten ahead of the curve are going to be in a better position from a cash and capital perspective than you will be if you wait.

It’s about doing what’s right for your business and what’s right for your customers. If you’re not making enough money, you’re not going to be able to serve your customers well. So in 2020 and 2021, when lots of things were colliding, we saw all furniture companies raise their prices, for example.

But some of them really excelled at it. They set expectations. They were really clear on their website. Some of them did campaigns beforehand about buying before prices went up. Some of them had people putting in deposits to get on a wait list for something that wasn’t going to come for nine or ten months. So there’s a lot of ways that you can set yourself up. And the important thing is to not just raise your prices arbitrarily.

You need to understand the market conditions. What are your competitors doing? Because it needs to be mutually beneficial. If you are going to hurt your business by trying to absorb costs, you absolutely need to raise your prices.

But you also can’t raise your prices so far that you price yourself way past your competition, way past what the value of your product is, and then no one will buy because then you’re going to be in a different problem. So if you need to raise your prices, do it.

Do it now and then spend time making sure that you set your marketing and your sales teams up for success so that they can go out and communicate, set those expectations, and everyone wins.