By now many small businesses have failed and that means there are fewer competitors and your business is in a better position to increase prices.
Especially with products and services that are unique to your business and if your customers don’t have many other options to meet their needs without going way out of their way.
Large businesses will be the first to increase prices, as investors demand profits similar to other parts of the world. As other nations exit the recession before the U.S., international investors will put a lot of pressure on large businesses to match profits that are being generated in other parts of the world.
In order to match the profits of other emerging markets around the world, businesses that have already cut costs in every way possible, will have no choice but to raise prices.
Inflation is in the cards for so many reasons. Here are a few reasons that prices will begin increasing;
- Rising interest rates will pressure businesses to increase prices to pay for the additional expense of interest payments made to creditors.
- Investors (as mentioned above) will demand profits margins that are at least has high as nations that are already recovering from the recession.
- Raw materials are going to cost more as the dollar continues to lose value from the trillions that the Fed has added in the economy.
The U.S. consumers will be forces to pay more for products no matter what the government tried to do next.
As bad as that may sound, small business owners don’t have a lot of options left and as prices increase throughout the market, customers will begin to expect an increase in your prices.
Millions have already seen their Credit Card interest rates increase and therefore they know that credit is no longer cheap. The public will begin to expect an increase in prices as their own credit has tightened and interest rates continue to increase.
Of course small businesses will continue struggling with very few customers, which will cause them to be very hesitent to increase prices, but the smart ones will increase prices sooner rather than later.
And the smart consumers will continue to find the small businesses that have yet to increase there prices.
If you don’t think you can increase your prices right now, why not start testing the market and see if your customers have other options. If you and your competitors are losing money underbidding each other, sooner or later you are going to have to increase your prices or one or more of you will fail.
The question is how many businesses like yours can the market support. If your industry has already reached the point where supply and demand are equal, then now is the time to start increasing your prices.
Just last week I had a customer ask me if my prices were going to increase next year. That is proof that customers are expecting to see a price increase and next year will be the right time to start increasing prices.
Another way to test the market is to start asking your customers what they would do if you started increasing prices.
Next year is going to be another challenging year for small businesses and many more may fail.
But some of them will survive by using the current market inflation to justify their own price increases. Last year was about lowering costs and next year is going to be about increasing prices.