Is inflation under control?
The Reserve Bank of Australia AND the Australian Government like to think so, and the general public also want it.
But is this RBA goal achievable?
The short answer is no. The politically correct one is yes. This means you need to show courage now and increase your prices to match inflation. We suggest cost plus, with return on investment which is 15 percent. This also needs to be shared over how many units sold or a billable house. Inflation projections range from 5 percent to 7 percent currently.
Set Your Prices Now in case the Year is Tough!
In recent times, Australia has experienced a surge in inflation, presenting a significant challenge for businesses across various sectors. Inflation, driven by factors such as increased demand, supply chain disruptions and rising production costs has put pressure on businesses to reassess their pricing strategies. As the economic landscape evolves within Australia and the Mid-North Coast, businesses must consider the benefits of raising their prices promptly.
Ensure Sustainability and Continued Growth
One compelling reason for businesses to adjust their prices now is to maintain profitability. Inflation erodes the purchasing power of consumers, impacting their disposable income. By proactively adjusting prices, businesses can mitigate the negative effects of inflation on their profit margins, ensuring sustainability and continued growth.
Additionally, raising prices allows businesses to cover escalating operational costs. The cost of raw materials, transportation and labor has seen a notable uptick, putting a strain on profit margins. Timely price adjustments enable businesses to offset these increased costs and maintain their competitiveness in the market.
Maintain Transparent Communication with Your Customers
Moreover, a judicious approach to price increases can foster long-term customer relationships. Transparent communication about the reasons behind the adjustments and the value proposition offered by the products or services can help build trust with your customers. Mid-North Coast NSW businesses that navigate inflation with agility and strategic pricing are better positioned to weather economic uncertainties and emerge stronger in the post-inflation landscape.
In conclusion, the current inflationary environment in Australia necessitates that businesses carefully evaluate and adjust their pricing strategies. Proactive measures not only protect profitability but also contribute to sustained customer satisfaction and loyalty in the face of economic challenges.
Simple Economics from Terry Murphy.
NOTE: This is general advice only and needs to be checked with your accountant. Feel free to get in touch with us to discuss how your business can navigate inflation.