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Putting prices up is a decision companies don’t take lightly. With every price rise, the likelihood of winning more orders diminishes, or is at least made harder.
The industry has been creaking all year from the pressure of price rises. PVCu polymer prices have gone up, polycarbonate prices have gone up 3/4 times already this year, as has glass and panel costs. The question posed then is: what to do?
Companies can do one of two things, absorb it and let it eat into their profit margin, or pass it on to the customer. If it was up to me, I would be passing all price increases on. Absorbing costs and lowering margin is just plain risky, and it doesn’t make good businesses sense. Profit margins are there for a reason. Businesses and people aren’t in business for the good of their health, they are there to make money – so pass the prices on.
People are always going to need windows and doors. That’s a fact. I also understand why companies absorb costs. They are worried that if they increase prices they will lose business to their competitors who haven’t increased theirs, letting it dwindle away their profits. I say just sell your products well. A price, if it’s higher, can always be justified if there is good reason, that’s why we’re salesmen.
So it’s time we all started running our businesses properly, tell the buying public that we live in a world of higher costs now, and start selling our products at the right price!
The industry has been creaking all year from the pressure of price rises. PVCu polymer prices have gone up, polycarbonate prices have gone up 3/4 times already this year, as has glass and panel costs. The question posed then is: what to do?
Companies can do one of two things, absorb it and let it eat into their profit margin, or pass it on to the customer. If it was up to me, I would be passing all price increases on. Absorbing costs and lowering margin is just plain risky, and it doesn’t make good businesses sense. Profit margins are there for a reason. Businesses and people aren’t in business for the good of their health, they are there to make money – so pass the prices on.
People are always going to need windows and doors. That’s a fact. I also understand why companies absorb costs. They are worried that if they increase prices they will lose business to their competitors who haven’t increased theirs, letting it dwindle away their profits. I say just sell your products well. A price, if it’s higher, can always be justified if there is good reason, that’s why we’re salesmen.
So it’s time we all started running our businesses properly, tell the buying public that we live in a world of higher costs now, and start selling our products at the right price!
>Great point, Jason. I've never understood why businesses refuse to pass on higher costs to customers who are demanding the product/service. This leads to decreased margins in the short term, and unhealthy, unsustainable business in the long term. Businesses need to refrain from being the low-cost provider and start selling value-in order to remain viable.
>Kyle – the industry over here is blind sometimes. Companies are more worried about the competition than themselves. They would rather not pass on any costs and take it on the chin, for fear of becoming slightly more expensive, risking financial trouble. It's just common sense!