Business faces inflation spike dilemma

poses a dilemma for businesses concerned about the need to protect profit margins without hurting sales volumes or damaging their brands.

“The risk is that even if you know you need to do it, and you plan to do it that the execution will be too rough and too undifferentiated. You need to differentiate by willingness-to-pay or profitability.”Petzoldt says it is a mistake for companies with a broad portfolio of services and products to do a flat price increase on everything of, say, 5 per cent.Advertisement

For example, small businesses often get the same price treatment as large key clients and this can present an opportunity to match prices to the cost of supply. “They were just good at negotiating or the salespeople were too friendly or whatever the reason might. If you increase prices, you start probably with those which are below the deserved price.

About half of Australian companies in the survey said they have price increases planned for the year ahead.

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