Can You Pass Higher Expenses on to Customers? Six Thoughts

Situation: A company is concerned about increased energy expense as prices rise, and the impact on the bottom line. Pricing in their market is competitive. What’s the best way to recover these costs? Can you pass higher expenses on to customers?

Advice from the CEOs:

  • Businesses regularly pass on their increased gas and transportation costs to both commercial and retail customers as these costs rise.
  • This isn’t just true for gas and transportation expenses. As other expenses rise, companies regularly increase their pricing to account for increased costs.
  • Is it necessary to send out an announcement letter about the company’s intent to do this?
    • Some companies do. Others just start adding a line with a gas surcharge to their invoices. This is happening frequently enough so that most customers just pay it without question.
  • What do you do if someone objects?
    • If a customer objects, you always have the option to credit them the charge.
    • Again, most customers are so accustomed to seeing and tolerating these costs that they don’t object.
  • Look at the company accounting system. Are costs and performance trackable by business segment? Performance numbers show both the impact and magnitude of energy cost and improve the ability to manage the business.
  • If the talent is not present to either improve the current accounting system or to shift to better software, bring in part time accounting help. A good source is Robert Half International/AccountTemps. The cost of adjusting the current system will be recovered as the company gains more control over expenses by segment.

4 thoughts on “Can You Pass Higher Expenses on to Customers? Six Thoughts

  1. Basil Badenhorst

    Obviously it is a given that one has done all the homework and that all costs have been scrutinised. To “slip” an additional cost in on the invoice in my opinion is the incorrect way to do things. Consumers will see it as being underhanded. We all know that one bad ad is damaging and it negates a number of positives – it is not 1 for 1. I believe the way to do it is to declare the intention and explain the why’s yet offer an incentive to the customer for understanding. We are in an age of respectful open communication and big business does not have the license they might have had in the past to run over the minions.

  2. バーキン 鞄 価格

    Having read this I thought it was really enlightening.
    I appreciate you taking the time and effort to put this information together.
    I once again find myself personally spending a lot of time both reading and commenting.

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign in with Twitter