Many small businesses are reluctant to put up prices as they’re conscious of the financial impact on customers.
According to Smart Energy GB, small business owners have seen their average overheads go up by almost a fifth (17%) in the last year.
And in the last five years, the average amount they spend on energy has risen by almost a quarter (23%).
Many small business owners have had to try to absorb these higher costs by charging more for their goods and services.
In fact, figures show that two-thirds of small businesses have put up prices three or more times in the last five years, and one in four plan to do so again before the end of summer.
Nevertheless, this isn’t a decision they’re keen to make.
Small businesses looking at efficiencies instead of price hikes
Nearly nine in ten (88%) small business owners consider raising prices a last resort.
As a result, many are taking steps to avoid passing costs on to customers, such as:
- Cutting non-essential spending - 31%
- Trimming profit margins - 30%
- Reducing their own salaries - 28%
- Lowering their energy consumption - 25%
- Negotiating with suppliers for better deals – 23%
And that’s partly because they’re worried about how price hikes will affect their customers.
Business owners fear price hikes could push customers away
Many small businesses believe customers have accepted recent price hikes with good grace.
As the research shows, more than one in three (34%) feel their customers have generally been understanding when faced with prices going up.
But eight in ten (81%) business owners still feel anxious about rising them again.
Nearly four in ten (38%) of those who are worried raised concerns that many of their customers are already struggling with the cost of living and might not be able to absorb more price hikes.
And a similar number (36%) said they believe some of their customers might respond by looking for other, cheaper options.
"We can see many small business owners are doing everything they can to manage rising running costs, while limiting the impact on their customers,” said Victoria Bacon of Smart Energy GB.
