Are your prices supporting or detracting from your bottom line?

All of you will have worked hard to contain costs in recent years, often struggling to make ends meet and get a decent return on your investment and efforts. But there’re two components to the profit equation, and one is income. Are your pricing decisions helping or hindering your efforts?

Back in 1995 when my kids were into fast food, I noticed one of the outlets moved their prices on a regular basis. One of their meal deals was $5.45 – coincidently Liddle Wonder’s PB6.5 hebes were also $5.45 and I determined to keep pace … $5.45 became $5.75, then $6.45. But that’s where it stopped … I could not match $6.75; our market would not bear it. Last weekend that meal was $7.90 – your hebes?

Need more definite data? In that same time period the CPI, the producer price index and the labour cost index have all moved around 40%. $5.45 in late 1994 transforms to $7.63 today.

Whether you’re grower or retailer, take five and look up an old price list, and old invoice or an old advertisement and compare the price you’re getting today with those of time past – as a guide, 2009 December CPI movements from 1994, 1999 and 2004 are 40%, 31% and 15% respectively.

And if you need more incentive … the minimum wage moves on 1 April, have you filled you car up recently and news is that fertiliser prices are on the move again!

John Liddle