Don’t let that blog title deceive you, I’m not saying that all prices for all products should be expensive! Let me explain…
I drove past a Carpet Right van the other day. On it’s side it said: “driving prices down”. But that then got me to thinking about the whole supply chain, not just of our industry but of the whole of business.
Take supermarkets for example, and more specifically milk prices. There has been a major protest by farmers due to the latest round in cuts by suppliers for what they are prepared to pay for their milk. Their argument was that if they accepted the latest rounds of cuts, they would lose money for every litre of milk they sold. Obviously when you are trying to run a business making a loss on any product is a bad idea. The farmers were keen to make sure that this didn’t happen.
It is unfair. Why should the people at the very beginning of the supply chain be forced down by their buyers? They need to make money. Everyone knows how much supermarkets put pressure on the people they buy from to lower prices. Fair prices should be paid to everyone in the chain, from the people/businesses at the start, right up to the customer buying it from the shelf or business.
And this is something that customers in our industry could learn. Customers try their very best to get the largest discount they can. For those who implement mega discount structures then this is do-able. But for those who work on the cheapest price possible, they need that margin to stay in business. Giving it away just means that they become busy fools, treading water rather than making a profit.
The point I’m trying to make is this: during these harsh economic times, everyone in the business supply and service chain deserves to make a profit. The key is to make a profit that rewards suppliers, installers and a margin that makes the customer think that they are getting a fair price.
Driving prices down in the long run only hinders those right at the beginning of the supply chain.
Of course when it comes to strategic price increases from the glass cartel then this lands right on the other end of the spectrum. This sort of behaviour takes advantage of an industry that is struggling to maintain their margins. The biggest glass companies make profits in the hundreds of millions. No balance there then.