Small and mid-size companies are often uncomfortable raising their prices. As a result, they don't change their prices for years. Sometimes, when a vendor increases prices of raw materials, small and mid-size companies will begrudgingly and uncomfortably raise their prices by exactly that amount, passing the increase on to the customer. But no additional net profit is gained, because so many small and mid-size companies are reluctant to ask.
“Our customers will leave us,” they predict.
This is actually not true.
I often ask my clients' customers what they'd do if my clients' prices went up a point or two?
The answer: nothing.
They've been with you for years, or decades, for a reason.
They trust you. They value you. They depend on you. You make them money. You help them retain their customers. You help them look good. You're friends. Some of them think of you as family.
You don't leave relationships like that over 1 or 2%.
In 2014, the inflation rate in the United States was 1.58%, according to the U.S. Bureau of Labor Statistics.
In 2013, it was 1.59%.
In 2012, it was 2.93%.
In 2011, it was 1.63%.
In 2010, it was 2.63%.
In 2009, it was nearly 0.
But in 2008, it was 4.28%.
And in 2007, it was 2.08%.
We could keep going, and going, and going.
My point is, your customers won't leave you over gradual, small, but consistent price increases.
The trouble occurs when you don't increase prices at all for 10 years, and then ...