800-465-4656 [email protected]

Pricing Strategies to Outmaneuver Inflation

Inflation and rising costs can seriously erode your businesses profits…

Now the very real threat of a 25% tariff on all goods exported to the USA will squeeze profits for businesses selling across the border.

For family-owned businesses, where relationships and long-term stability matter, the challenge is even greater. A misstep in pricing can erode trust, while failing to adjust can eat away at profits.

The good news?

Smart pricing strategies can help you stay ahead. Here is how you can outmaneuver inflation and tariffs while keeping your business healthy and competitive.

Understand Your Cost Structure in Detail

Before making any pricing decisions, get a granular understanding of your costs. This means knowing not just your direct costs (materials, labor) but also overhead (rent, utilities, software subscriptions).

  • Action step: Review your cost structure monthly to spot trends and pinpoint where inflation is hitting hardest. This is one step we do monthly with our clients in our Controller’s meeting.
Use Strategic Price Increases

Instead of across-the-board price hikes, implement targeted increases that align with value perception.

  • Increase prices on high-demand, low-elasticity products/services—those your customers cannot easily replace.
  • Offer tiered pricing—keep an entry-level option affordable while adjusting premium offerings to reflect value.
  • Gradual vs. one-time hikes—small, incremental increases over time can be more palatable than a single large jump.
Improve Pricing Psychology

Consumers do not always respond rationally to price changes. Leverage pricing psychology to maintain sales.

  • Charm pricing: A price of $97 often feels significantly lower than $100.
  • Anchoring: Show higher-priced options first to make standard offerings seem like a great deal.
  • Bundle services/products: Customers are less sensitive to price changes when items are bundled together.
Lock in Long-Term Contracts with Suppliers

Negotiate multi-year agreements with key suppliers to lock in better rates and protect against sudden cost spikes. Consider bulk purchasing or forming partnerships with other businesses for greater buying power.

A well-known cliché – lean and mean – applies now to overhead. Look at all your fixed costs and ask – do I need this now? If yes, can I get it for less with another supplier, and not lose the quality I need?

  • Action step: Review all supplier contracts and identify opportunities for renegotiation.
Introduce Value-Added Services Instead of Discounting

Discounting can erode margins and set customer expectations for lower prices. Instead, add value in ways that do not significantly increase costs.

  • Offer free training, extended warranties, or enhanced customer support.
  • Provide loyalty rewards or exclusive first access to new products.
Improve Operational Efficiency

Cutting waste and optimizing internal processes can free up resources to absorb cost increases without passing them all to customers.

  • Automate repetitive tasks with technology (e.g., like we do with Plooto for payments, ApprovalMax for approvals).
  • Streamline supply chain and inventory management.
  • Reduce overhead costs by outsourcing non-core functions.
Implement Dynamic Pricing

Big retailers and airlines use dynamic pricing to adjust rates based on demand and market conditions. Family-owned businesses can take a similar approach by adjusting prices for peak seasons or high-demand products.

  • Example: A flower grower might increase prices before Valentine’s Day but offer discounts post-holiday.
  • Action step: Monitor demand patterns and consider flexible pricing models.
Educate Customers on Pricing Changes

Transparency builds trust. If you need to raise prices, explain why. Customers are more understanding when they know the reason behind increases—especially if you highlight the continued value you provide.

  • Use newsletters, social media, or personal conversations to communicate pricing changes effectively.
  • Reinforce the benefits of your product/service—superior quality, reliability, or unique expertise.
In Closing

Inflation, tariffs, and rising costs are a challenge, but they do not have to derail your business. By strategically adjusting prices, optimizing efficiency, and focusing on value, you can protect your margins and maintain customer loyalty.

Thank you for reading…

Digital Sabbaticals – The Retreat Your Brain Needs

Our digital world holds many advantages…

Our business would not function without the internet and online software.

Yet, there is a downside. Being online, all the time, and losing touch with nature and the analog world.

I thought this was a terrific blog from the Freedom app I use to manage my online time:

Digital Sabbaticals

What do you think of this? Would love to hear your thoughts.

Thanks for reading…

A 10 Step Guide to Raising Prices Without Losing Customers

Every business faces the delicate task of raising prices…

Whether it is due to rising costs, inflation, or a desire to increase margins, increasing prices can feel risky. Who wants to lose customers?

The truth is, when done thoughtfully, a price adjustment (great word, adjustment, isn’t it?) does not have to send your customers running. It can even strengthen your relationship with them. Here are ten steps on how to raise prices while keeping your customers loyal and your business thriving.

Step 1 – Understand Your Value

Before making any changes, take a step back and assess the value your business delivers.

What makes your product or service unique?

Why do customers choose you over competitors?

If you are confident in the value you provide, it will be easier to communicate why the price change is justified. Use metrics like customer satisfaction scores, testimonials, and retention rates to solidify your confidence.

Step 2 – Evaluate Market Conditions

Research competitors and industry trends.

Are others in your market raising prices? What are the current customer expectations?

Understanding the market context will help you set a price that is competitive yet profitable. Tools like cost benchmarking and competitor analysis can provide useful insights.

Step 3 – Segment Your Customers

Not all customers are the same. Segment them based on factors like purchasing frequency, loyalty, and price sensitivity.

By understanding which groups are more likely to accept a price increase, you can tailor your approach and messaging to reduce pushback.

Step 4 – Communicate Clearly and Transparently

When it is time to announce the change, clarity is key. Be upfront about why you are raising prices. For example:

  • “We are committed to maintaining the quality you expect, and this adjustment allows us to keep delivering exceptional value.”
  • “Due to rising costs in materials and operations, we’ve made the difficult decision to adjust our pricing to ensure sustainability.”

Express gratitude for their loyalty and frame the change as part of your commitment to long-term excellence.

Step 5 – Add Value Alongside the Price Increase

Customers are more likely to accept a price change if they perceive added value. Here are some ways to do this:

  • Enhance your product or service offerings with additional features or benefits.
  • Offer loyalty rewards, exclusive discounts, or upgraded support.
  • Bundle services or products to create more value for the price.
Step 6 – Offer Advance Notice

Whenever possible, provide customers with enough time to adjust to the change. A 30-day notice is widespread practice. This demonstrates respect for your customers and gives them time to budget for the new pricing.

Step 7 – Pilot the Change

If you are unsure how customers will react, consider testing the price increase with a smaller segment before rolling it out to everyone. This can help you gauge the response and refine your strategy as needed.

Step 8 – Train Your Team

Your employees are the face of your business, and they need to be prepared to address questions or concerns from customers. Equip them with the right messaging and tools to explain the value of the price change with confidence and empathy.

Step 9 – Monitor Customer Feedback

After implementing the new pricing, keep a close eye on customer reactions. Monitor sales data, feedback forms, and social media comments. If there’s significant pushback, consider offering temporary incentives or reevaluating certain aspects of the change.

Step 10 – Celebrate Your Wins

If your price increase is successful, take the time to celebrate! Share the results with your team and reinforce the importance of delivering consistent value to your customers. Positive outcomes can boost morale and set the stage for future growth.

In Closing

Raising prices does not have to mean losing customers. By understanding your value, communicating effectively, and delivering exceptional service, you can maintain trust and loyalty while improving your bottom line. Price increases are an opportunity to reaffirm the strength of your brand and ensure the long-term success of your business. So, take the leap confidently—your customers may even thank you for it!

Thank you for reading…

How Precious is Your Culture?

The Ming Vase – A Symbol of Rarity and Value

Imagine I give each of you, as a business owner, a priceless, one-of-a-kind, Ming Vase…

At first, you are speechless. You marvel at its rarity, its delicacy, its beauty.

You treat it carefully, tenderly. You show it off to your friends and family.

It becomes the centrepiece in your living room.

Gradual Neglect – Losing Sight of What Matters

Then, gradually, imperceptibly, over time something happens.

You notice it less and less.

You no longer see its rarity and pricelessness.

You find a new home for it – your daughter’s bedroom. She uses it as an umbrella stand.

It never gets cleaned. If you look closely, it has a small cobweb or two,

The Ming Vase – The Symbol of Your Business

So, what is my point?

This Ming Vase is a symbol of your culture.

Your business was never just a means to make money. It was a creation, a culture, that you built from nothing, and returns you money. It also returns you gratitude, love, respect, joy, purpose, and fulfillment.

Are You Treating Your Culture Like a Priceless Treasure?

Do you treat the culture in your business like a precious Ming Vase? If not, why not?

And here is the thing, a culture is as difficult to form, shape and build as a Ming Vase. And equally as delicate.

A takes a lot of work to build it. And nothing to destroy it.

How Cultures Break – Neglect and Compromise

We know how to break a Ming Vase. Stop caring for it. Drop it.

What about a culture?

The building block of culture is relationship. And how does relationship get built?

Words. The creative word.

The Power of Creative Words

Creative words communicate more than the time of your next meeting. Creative words edify, lift up, empower, inspire, and motivate.

Over time these powerful words build your business culture. They are the oil of relationships – with your customers, your Team, your suppliers – everyone.

And, as I have repeated many times, how you do one thing is how you do everything. You cannot build a culture saying kind words to your customers and then yelling at your Team. That does not work.

The Strength and Fragility of Culture

Over time your culture will be as strong as tensile steel and as delicate as a Ming Vase. It has both qualities. How so?

It has the strength of tensile steel over time because your words, and the words of your Team will become second nature. People stepping into the culture will act out the values of the culture. The culture becomes who they are, what they say, the actions they take. It becomes, as the cliché says, like water to a duck.

On the flip side, this precious culture can be destroyed with a few misplaced words, actions, or worse…

Compromise – The Silent Destroyer

Over time, you stopped seeing the preciousness of your culture (like the example above). You let spider webs creep in. You compromised the culture.

You took shortcuts. (It takes longer to write texts and emails using softeners to maintain your culture). Over time, you, and your Team stopped taking the time to write in this creative way. You saw that your customers, suppliers, and the general business community did not care about culture like you do.

So, you compromised, and over time a degradation seeped in.

And, one day you woke up and realized that your business was ordinary, like everyone else’s. It was no longer a thing of rarity, of preciousness. It was cracked…

Rebuilding a Broken Culture

What to do?

Simple.

Start again. Go back to the beginning and start using words wisely. Speak and write and think with softeners. (“I wonder if you would be so kind to…” … “Thank you for sending me those documents so quickly” ….” Kindly find attached your reports for the month”).

You can rebuild your culture and shape it according to your values.

And, remember this, it takes ongoing care, and awareness to keep your culture going.

Oh, and lastly, what does this have to do with creating a successful, profitable business?

Everything. Everything. Because you are not creating a money-making machine (that is the result). You are creating a magnificent life!

Thank you for reading….

5 Ways a Profitable Company Still Goes Broke—and How to Prevent It

Profitability and cash flow—two terms often used interchangeably—could not be more different.

And yet, countless businesses that report strong profits find themselves scrambling to pay bills, meet payroll, or keep the lights on. How is this possible?

Let us unravel the mystery behind why profitable companies still go broke—and, more importantly, how you can avoid this financial trap.

The Profit vs. Cash Flow Dilemma

At its core, profitability is a measure of what is left over after all expenses are deducted from revenue. It looks great on paper, but it does not guarantee cash in the bank. Cash flow, on the other hand, is about liquidity—the money you have available to cover day-to-day operations.

Here’s how things can go sideways:

Timing Mismatches:
    • Imagine sending out a big invoice for a completed project, but your client takes 90 days to pay. Meanwhile, your suppliers want their money yesterday. Profitable? Yes. Broke? Also, yes.
Overexpansion:
    • Growth is exciting, but rapid expansion can drain cash reserves. Those new hires, bigger office spaces, and fancy equipment do not pay for themselves overnight.
    • These are all Fixed Costs that you must have the Gross Profit to cover.
    • For every new Fixed Cost planned take the monthly amount and divide it by your Gross Profit Margin.
    • Let us say you want to hire a new operations manager; The cost is $7,500 per month. Your Gross Profit Margin is 30% (the amount left over after direct Cost of Goods Sold are deducted from your sales, expressed as a percentage).
    • $7,500 divided by 30% equals $25,000. You need at least $25,000 in new sales to cover that new operations manager.
    • Do this with every new Fixed Cost to become aware of how much you need to cover this extra cost in your business.
Poor Inventory Management:
    • For businesses dealing with physical goods, tying up cash in slow-moving inventory is a surefire way to squeeze liquidity.
    • I once coached a business (not a client; I did it as a favour) that was profitable for 35 years. They could not figure out why they showed great Net Profit and yet were struggling to pay their bills.
    • On examining their Balance Sheet I quickly discovered that the bookkeeper had been recording some of the Cost of Goods Sold as inventory purchases. Thus, their expenses were understated and Net Profit overstated.
    • The inventory on the Balance Sheet was not real inventory that could be sold.
    • The owners were not amateurs; they were just overfocused on the Income Statement and ignoring their Balance Sheet.
Debt Overload:
    • Interest payments on loans or lines of credit can quickly eat into cash, especially if revenue is not rolling in as planned.
    • Especially, also when interest rates go up exponentially when debt is up for renewal.
Ignoring Hidden Costs:
    • Costs like taxes, employee benefits, or unexpected repairs often catch businesses off guard, draining available cash.
How to Prevent the Cash Flow Crunch

Now that we have pinpointed the culprits, here are practical steps to prevent your business from becoming cash-strapped:

Forecast Your Cash Flow:
    • Regularly track and predict your cash inflows and outflows. Tools like Xero, ApprovalMax and Fathom can help you stay ahead of surprises.
Tighten Payment Terms:
    • Do not let clients dictate payment terms. Consider incentives for early payment or use tools like Plooto to automate and streamline collections.
Build a Cash Reserve:
    • Aim to keep at least 3-6 months of operating expenses in a savings account. This buffer can shield you from unexpected shortfalls.
    • Most personal financial planners recommend this, yet too few businesses follow this same advice.
Control Growth Pacing:
    • Grow strategically. Before making big moves, assess how they will impact your cash flow over the next 12-24 months.
Review Debt Regularly:
    • Consolidate or refinance high-interest debt to lower your monthly obligations. Be mindful of the balance between leverage and liquidity.
Monitor Metrics That Matter:
    • Keep an eye on key metrics like Days Sales Outstanding (DSO), inventory turnover, and operating cash flow. These will give you an early warning of potential problems.
Stay Cash Flow Confident

Remember this – a profitable business is different from a healthy one. By focusing on cash flow, you will ensure your company not only survives but thrives.

Want to dig deeper into your financial metrics or get a handle on cash flow management? Let us talk. We specialize in helping businesses like yours bridge the gap between profitability and liquidity—so you never have to worry about going broke while turning a profit.

Thanks for reading…

 

The 1% Margin Fix That Can Boost Your Profits by 10%

Is a 1% improvement really worth the effort?

Absolutely. In fact, tweaking your margins by just 1% could send your profits soaring by 10%—or more. It is not magic; it is math.

And for businesses with tight margins—like construction companies, property managers, and flower growers—it can mean the difference between barely scraping by and thriving.

Here is how small changes can lead to big results.

Why Margins Matter More Than You Think

Your profit margin is not just a number—it is your business’s pulse. Margins tell you how efficiently you are turning sales into actual profits. When margins are thin, there’s little room for error. But when you tighten them up—even slightly—the ripple effect on profits can be dramatic.

Imagine this: You are running a $2 million business with a 10% net profit margin. That is $200,000 in profit. Increase your margin to 11%, and now you are pulling in $220,000—a $20,000 bump without adding a single customer or working extra hours.

The 1% Fix in Action

Where do you find that magical 1%? Here are three quick wins:

  1. Raise Prices Strategically
    Do not panic—this does not mean scaring off customers. Even a small price increase (1–3%) can have minimal impact on demand while significantly boosting margins. Communicate the added value your business provides to justify the bump.
  2. Cut Costs—But Smartly
    Focus on expenses that do not directly impact quality or customer satisfaction. Negotiate better supplier terms, switch to more efficient tools, or streamline processes to lower labor costs.
  3. Reduce Waste and Errors
    Errors and inefficiencies can quietly drain profits. Automate billing, optimize inventory, and double-check quotes to avoid costly mistakes. Every dollar saved goes straight to your bottom line.
The Hidden Multiplier Effect

What is so powerful about the 1% fix? It is scalable. Once you start thinking in terms of incremental improvements, you will spot more opportunities. Trim expenses by 1%, increase prices by 1%, and boost efficiency by 1%, and suddenly you are stacking gains.

For example: A property management company cutting vacancy times by 1% while raising rents slightly could see profits snowball over a year. Similarly, a construction firm reducing rework by 1% while negotiating better supplier rates can watch margins grow without adding overhead.

Check Your Numbers—And Keep Checking Them

The key to making this work is knowing your numbers cold. Regularly review your financials—especially gross and net margins—to track progress. Look for trends, red flags, and quick wins.

Better yet, work with an accounting partner (like us) who can highlight opportunities you might miss and help you implement changes that stick.

Ready to Boost Your Profits?

Small changes drive big results. Whether it is tweaking pricing, streamlining operations, or cutting waste, the 1% margin fix can deliver the 10% profit boost you are after—without overhauling your business.

Thanks for reading…