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How To Handle Inflation
It’s no secret that inflation is causing the prices to go up on everything. For many shop owners, their first knee-jerk reaction would be to try to reduce expenses. Instead, I want to offer a suggestion that may give you a different perspective on handling runaway inflation.
For argument’s sake, let’s suppose that a shop’s costs have gone up 15% from what they used to be. Instead of trimming expenses by 15%, I will offer a different way to do it. I would say raise your prices by 15%, and here’s why.
In our shop, expenses run 40% of revenue. We did $100K/mo. in total gross sales. Expenses were $40K/mo. 15% of $40,000 in expenses is $6,000. However, 15% of $100,000 in gross sales is $15,000. Going up in price by 15% makes you 2.5 times more than cutting expenses by 15%.
I suggest that even during non-inflationary times, it is always more profitable to go up by a percentage than cut your expenses by the same percentage. However, while this might sound easy, it creates another problem. That problem is sales skill and value building.
This is why it’s so important to get professional sales and telephone training. There’s no shortage of professional trainers in our industry. One of the most significant breakthroughs in my professional career is when I quit going to technical seminars and training. Instead, I went to professional sales and telephone training.
My life became so much easier, and so can yours by raising the sales price with professional sales, telephone, and marketing training. No increase in price will help if you can’t sell it.
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