When my father owned our business, he did the quotes, and the ones I did he signed off. He had a strict pricing structure I stuck to and all was good.
After he retired I kept to his rules religiously. Mark ups on paper, margins, press time estimates – everything stayed the same. I was convinced if I deviated one cent my customers would flee in horror.
Time went on and inevitably my costs went up. I passed on the paper increases but everything else stayed the same. And then came the day I realised I just was not making as much anymore. The fixed costs I had ignored had crept up and the margins Dad had used to recover them were not doing the job anymore.
These were things like electricity, rent and wages, none of which I could do much about. If I wanted to maintain my profitability I would have to do the unthinkable and put my prices up.
I lost sleep worrying about it. I tried to work out how much business I would lose if I put my prices up, and wrestled with the hope that I might make more money off the clients that remained. Maybe that would leave me more room for better margin jobs, but then again who would give me work if I was now the most expensive printer in all of Sydney?
It was such a loaded decision that in the end I did what I almost always do with problems that come with extra ambivalence, and went back to what I learnt in my economics degree. Work the problem and be rational. I had to raise my prices.
So I went through all my pricing spreadsheets (no wasteful MIS for me, then or now) and increased the margins. It was not much, about five per cent on top of everything, and as I type this I can still remember the sweat running out of me as I hit the buttons.
The next few quotes came in, both from existing clients and prospects and I sent them out with the new prices, sick in the knowledge that I was going to lose them all. But I didn’t. Sure I lost some, but the same proportion as I normally did.
My regular clients barely noticed the increase. The ones who did just grunted and got on with it. I do not know if any put the work out to tender in response, but if they did we did not lose any of them. In fact we kept growing at the same solid rate we had been year on year and I was back to making good money again.
I learned the lesson and have never been afraid to put my prices up since. Sure we lose quotes on price a’plenty, but a customer you win on price you will lose on price and I do not want them wasting my time.
Be not afraid. Put your prices up.
Baden Kirgan is managing director of Jeffries Printing Services
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