Record rise in inflation and your business

My VIP Rewards are here to help to support people with the increase in cost of living. It’s tough! And we want to help people to save on their everyday spending , supermarket shopping, Christmas and entertaining the kids. We have no plans to increase our prices but we do have plans to increase our discounts so people can save more money. Christmas is always such an expensive time and we can save people lots of money! It’s not all doom and gloom! Our app helps to combat!

We must remember that if we raise our price, we risk losing customers, especially those who are now being hit by the removal of the Universal Credit "uplift payment of £80 per month" We are dammed if we do raise prices and dammed if we don't..

In short, yes. Regardless of inflation, prices of certain products have been driven down far too low compared to the true costs of creating these products sustainably. Not always, but many times low prices come at the expense of something, whether that be the planet or the quality, or someone. However, moving forward, pricing should be more focused on first-party data and developed around HOW your consumer engages with your business. A frequent consumer is more likely to be price-sensitive, however, their loyalty can be rewarded in line with this. Whereas, a less frequent consumer may be less price-sensitive and more 'experiential' in their purchasing. Pricing in line with your consumer's purchasing habits from first-party data, like loyalty schemes will help navigate this next season.

"I'm sure we are not alone in being placed in a difficult dilemma. We had to reduce our fees during the lockdowns of the past 18 months as our clients were themselves having cashflow trauma, and even though we have now increased our prices, they are still considerably below pre-covid levels. If this inflation figure becomes the norm rather than a 1 month blip, we will have no option but to increase our fees again, since we ourselves have rising costs which have to be covered from somewhere and can't be covered by reserves indefinitely. We do appear to have the perfect storm at the moment, an economy recovering from Covid, a complete lack of equilibrium between job vacancies and increasing unemployment and a Government which is looking to increase the tax burden rather than reduce it. Covid pushed the reset button on society in so many ways, I'm just not sure the economy has yet finished loading after Ctrl-Alt-Del."

"As inflation takes hold, prices will have to be adjusted to take account of this. The biggest worry here is not increasing prices, it’s that many people have taken mortgages out on homes that are potentially overpriced and the main lever the Bank of England has in order to control inflation is the Bank of England base rate. If the Bank of England decide that now is the time to raise the base rate to calm inflation, we could very quickly see house prices come down as a result along with interest rates rising that coupled with increased cost of living could spell trouble for a lot of people. Especially new homeowners with only 5% equity."

"The latest data makes for rather painful reading. In general, we have put the prices of 2022 holidays up by 5% to cover anticipated inflation and rising costs for our homeowners. To be honest, I wish we had gone higher. Anecdotally we have heard of prices being hiked up by 40-50% but we feel it is important to keep our returning guests loyal and to ensure they feel they are still receiving perceived value for money. Competition will be stiff once foreign travel returns with a vengeance coupled with an oversupply of holiday lets."

It's a fine balance as my digital agency focuses on providing affordable services to tech startups so whilst inflation has to be taken into account when reviewing pricing, so does making sure we have a smart business model in place. For us this means working with remotely distributed specialists in countries like south africa & Slovenia where we can still pay well yet provide affordability to clients.