It's probably not a good idea to put prices up during a recession – even though some experts argue for the practice.
A UK expert on owner-managed companies says that in these recessionary times it is advisable to raise prices, to show clients that you have that “golden edge”, or value proposition.
But Mahlako Hlakudi, CEO of Titan Trading Technologies, contradicts this thinking. “Right now it is not a good time to go around hiking prices, no matter how good your company is and how much you believe in your value added propositions.
"If times are tight, one has to be realistic. If raising prices is going to lose you clients, then why raise them? For what purpose? Certainly, in our industry, we are seeing a lot of pricing pressure coming to bear," he says.
Enterprise gurus at Cranfield School of Management in the UK argue that a price hike is preferable for owner-managers who clearly convey what is distinctive about their product or service.
The company states that, despite pressure to reduce prices, business owners who defy expectations and put them up, while continually stating their unique selling point, tend to be better placed.
The price increase is preferable “even if means losing some of your customers,” as they are “probably the customers who don’t really value your distinctiveness at all”, a spokesperson says.
Speaking to the press, Gerard Burke, of the school’s business, growth and development programme, says it may even be that that such clients are “costing you money to service them”.
“I think in recessionary times you look after clients – your current clients – and regard them all as valuable,” says Hlakudi. “This kind of conjecture is just that – conjecture.”