Are You Raising Prices Yet?

The National Federation of Independent Businesses ("NFIB") just released it's quarterly look at the economy. Among general signs of a slowing economy, it shows that more than one third of small companies are raising prices - and the issue is inflation to some extent. Is this happening to you? Are you feeling the crunch?

Margins are being squeezed by the increases in raw materials, benefits, and all to do with transportation. Survey participants reflected a 9% decline in sales for the last three months ending April 2008 while earnings were down 28%. Clearly price increases are needed but in a tough retail environment it's not the first thing you think of doing. Yet it must be done.

Witness the micro-brewing beer industry. They have seen price increases of more than 500% on some inputs. As a premium product their offerings have more latitude to increase, but only so far.

Think hard about your competitive situation beforehand, but if it's between losing money and losing a few customers, the latter is probably best. Depend on your quality and service and you will retain the customers who appreciate you the most.