How to Determine When to Raise Rates and When to Absorb Costs-Profit Is A Choice

225: How to Determine When to Raise Rates and When to Absorb Costs

WITH MICHELE WILLIAMS

As a business owner, one of the biggest challenges you face is managing your pricing strategy in response to fluctuating costs. Pricing is a crucial element that can determine the success or failure of a company. On the podcast today we will explore how to manage this in your business.

Key Thoughts:

Setting the right price for products or services is essential to ensure profitability, but sometimes external factors can lead to higher costs that may require a company to make tough decisions. Michele (1:03)

When you begin to incur higher costs as a business owner, one viable option is to adjust pricing accordingly. Increasing the price of products or services can help offset the additional expenses. Michele (1:59)

When facing higher costs, you have the option to absorb the additional expenses and reduce profitability. This can be a difficult decision, as it may lead to short-term losses, but can lead to long-term benefits. Michele (3:59)

There is a sweet spot for every business which might mean a minimal increase in pricing along with internal expense reduction strategies to mitigate loss of profitability. Michele (5:25)