Increasing the Pricing of Your Products and Services

Over the past several years I have written articles regarding product and service pricing and have made recommendations to my clients regarding the pricing of their products and services. These suggestions were based on my belief and experience that most businesses can pass on at least a 2 to 3 percentage price increase in their respective products and services to their customers each year and should do so annually at the same point in time, say January 1st.

Few customers if any will even notice that small an increase. If you are not doing this type of systematic pricing increase, your bottom-line profitability is going to suffer because the costs associated with running your business are increasing. If you don’t increase your pricing, you are simply absorbing the increases in your expenses (wages, insurance, rent, utilities, taxes, office supplies, advertising, and, the list goes on).  

An Example

One example I like to use to demonstrate this point is to take any year-end income statement for your business and add 3.0% to your revenue figure; see what that does to your gross profit margin and your net profit margin. Most business owners I ask to do that exercise will come back and tell me they are amazed, and they all wish they would have done something like that sooner.

What prompted me to write this article about increasing pricing for products and services is the present inflationary market we are experiencing. With the last published inflation rate of 9.1% (a 40 plus year high), if you are not increasing your product and service pricing right now by at least 9.1% your bottom line will be greatly affected in a negative way for 2022. I would almost guarantee you that you are experiencing increases in almost every expense item, like the ones I mentioned earlier.

Avoid the Wait

Further, if you wait until next year to increase your pricing, we could be operating in a much different business environment, perhaps a recession, and then it will be very difficult to pass product and service pricing on to your customers.

I recently heard of one business that decided to do a 25.0% increase in its service fee and add a 5.0% monthly fuel surcharge to its pricing, and it experienced had no questions or complaints.

I know and understand passing a double-digit price increase on to your customers might not be possible in every situation due to differences in competitive environments. But I would guess you could pass the inflationary rate of 9.1% on to your customers as a fair increase.

Lastly, I also know and understand that by increasing your product and service pricing you might feel like you are adding to the inflationary spiral. However, if you don’t increase your pricing as stated above, you will be simply absorbing the increases yourself in the goods and services that you have to pay. A simple saying, I have stated over the years might apply here: “Do you want to pay your mortgage payment, or do you want to pay someone else’s”?

Highlighting Rich Hall

Silver Fox Advisors is proud of our members and would like for you to get to know them better.

Rich Hall has been a valued member of Silver Fox Advisors since 2020. He currently serves as a Board member, Chair of the Membership Committee, and Facilitator of two CEO Roundtables (The Woodlands area and in partnership with Houston’s Better Business Bureau).

As the founder of Rich Hall Group, he works with small business owners and leaders to help them achieve their vision of success for themselves and their company. He has extensive experience with family-owned businesses looking to grow, transition to the next generation, or prepare for a successful exit.

In addition to his advisory and coaching services, Rich is the proud father of 3 boys, Jeremy, Mark, and Daniel, and husband to his beautiful wife, Jamie. They’re active members of The Woodlands Methodist Church, and parents to pandemic puppies, Bucky and Riley.

If you would like to learn more about Mr. Hall, or Silver Fox Advisors, see our website at www.silverfox.org/directory

Dr. Ken Wells

Featuring Dr. Ken Wells

Silver Fox Advisors is proud of our members and would like for you to get to know them better.

Dr. Ken Wells is one of our newest members. He is a seasoned executive with extensive corporate health experience spanning clinical medicine, health benefits, public health, and pharmacy. He is an Army reservist, flight surgeon, and pilot.

Ken serves as Vice-Chair of our CEO Roundtable Committee and an active participant in several of our programs including our recent Lunch & Learn on April 7th when we returned to an in-person gathering at the Houston Racquet Club. Ken joined a panel of other Silver Fox Advisors and updated those in attendance with information about “Hot Topics Facing Business Today.”

If you would like to learn more about Ken or join Silver Fox Advisors, visit our website.

Energy Security

As the Russia/Ukraine war escalates, oil and gas are really back in the spotlight. The rise in our gasoline prices largely driven by national policy to reduce the use of fossil fuels is now being exacerbated by the ramifications of this Russia/Ukraine conflict on worldwide oil prices. I had mentioned this in my recent blog …

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A Serious PLIGHT of the Business Owners and Execs

In my coaching activities, I have found that there is one common issue present in virtually all of these folks that leads to what I refer to as the 3 Ps:

  • Lower Productivity
  • Lower Profit
  • Lower Peace of mind

What is this roadblock?

CONTROL – it seems that most want too much control over many aspects of their business and other affairs. Often referred to as micromanagers

Almost always, they see others performing certain tasks and their first thought is that they could do it better, faster etc.

This leads to micromanaging, a desire to control too many things. This results in

  • Poor time management – spending time on trivial matters
  • Resistance and resentment from workers who want to do it their way – that are doing their best.

The Need for Control

Unfortunately, this need for control usually carries over to other parts of their life.

They want to be the writer and director of the play that is going on in their daily lives.

But because they cannot control so many things, they lose focus and momentum. Then people resist and the results almost NEVER turn out exactly the way THEY think it should or the way THEY would do it.

Since things are not meeting their expectation, this, in turn, leads to toxic emotions like frustration, which can lead to anger and resentment.

And people DO NOT like to be controlled. Like a dog resisting when you pull their leash. And since people are one of any firm’s most important assets, you need to set the stage for them to succeed and not control them.

Breaking this habit of control is the single biggest breakthrough I have witnessed in business owners that I have coached.

After I point out this issue and the negative consequences outlined above, they are ready to get out of that rut.

They are ready to work ON the business, not IN all the details.

Like right NOW.

Time Usage

They reaffirm what they already know – they should use their time on the highest and best use instead of the minutia that comes from micromanaging – in ALL of their affairs.

But habits are hard to break, so I recommend a process that they repeat over and over until they form a new better habit of “LETTING GO”.

That process is:

  1. I ask that they commit to me and another person, to give up fighting to control people and things
  2. They come to realize that while they engage in that fight, they never or rarely win.
  3. I have them realize the value of peace of mind that comes from accepting people places and things for what they are. In most cases you cannot FIX people and have a minor influenced on other things/situations
  4. They are to carry a copy of the serenity prayer with them and when they become agitated with people or circumstances, they PAUSE and read/think about, the serenity prayer.

A good but simple example is traffic.

 Instead of tensing up and/or shouting, pause and read/think about the serenity prayer

God grant me the serenity to accept the things I cannot change;

Courage to change the things I can.

And the wisdom to know the difference

I have seen this work with many people, myself included.

Their state of calm and peace of mind is immediately apparent and rewarding to them, their coworkers, their family, and friends.

Of course, vastly improved results naturally follow from such freedom. .

Do everyone a HUGE favor, let go of the reins and let the world go around.

Note – This article was written by Howard Rambin, of the MoodyRambin Company. He is a Silver Fox Advisor and is available for consultation, advising, and mentoring.

POSITION PAPER ON NON-PROFIT ORGANIZATIONS

Most non-profit organizations’ fundraising struggled in 2020 and 2021 as the Covid 19 economic shutdown forced in-person donor and financial supporter functions to be greatly limited in size and scope or even canceled. Some organizations moved to computer-generated fund-raising events but these events were not as successful in raising money as the more face-to-face get-togethers had been. In addition, many businesses struggled financially just to get their employees paid and their doors open, thus having monies for support to charitable organizations and causes was and is simply just not there.

Further, in Houston, Texas the oil bust of 2020 caused many large companies that operate in the energy sector to limit or completely do away with charitable contributions.

Even prior to these 2020 events there had been a “Trust Crisis” developing regarding non-profit organizations. Ben Gose, a contributor to the Chronicle of Philanthropy, addressed this topic in an article he wrote that was published in the Chronicle’s January 7, 2020 newsletter. This article is very enlightening and worth reading.

fund raising

With all this being said, there were also several very emotional political causes being promoted in this time frame, and many corporations began making contributions to certain groups and causes to show their stakeholders and customers that they are good corporate citizens and are providing support to these groups and causes.

On the Foundation giving side of fundraising, the story was somewhat different in that the stock market provided many Foundations that support non-profit and charitable organizations, increases in their corpora, thus enabling them to have the funds available to make contributions; however, these Foundations are getting more requests than ever before.

Further, Foundations have refined their requirements and giving criteria such that the request process has gotten more detailed and lengthier with committees and/or staff having to evaluate requests more thoroughly and provide the Board with very specific recommendations. Most Foundations today require at a minimum that organizations seeking funding have audited financial statements, which is an added cost burden on these charitable and non-profit organizations. Most Foundations will also check with Guide Star/Candid(1) to see if the organization has filed all the necessary organizational documents, like financial statements and 990 Tax Returns with Guide Star/Candid.

NON-PROFIT ORGANIZATION RECOMMENDATIONS

Richard Hendee/Horizon Associates, Inc. has been working with and assisting non-profit organizations for years. Further, Mr. Hendee has started several non-profits and has sat on numerous non-profit organization boards. He never agrees to serve on any non-profit board if that organization doesn’t have Director and Officers (D & O) Insurance coverage. In today’s litigious environment legal action of some kind is, unfortunately, a given. Even if the organization did everything right and by the book, if a suit is brought against the organization, typically the Directors and Officers are included in the suit, and the expense of hiring an attorney to defend being right can get really costly, an expense most individuals do not want to risk their personal assets for. Having D & O insurance coverage is a must for any non-profit.

Here are some other key recommendations:

  • Run the organization just like any for-profit business would be run. Eventhough the organization has been given non-profit status by the IRS for federal income tax purposes, it is still a business.
  • Develop a well-thought-out (not wordy) Mission and Vision Statement that clearly states the organization’s purpose and future direction.
  • Create an organizational chart that includes position titles and functional areas of responsibility.
  • Identify areas that need specific levels of expertise, like legal, accounting and human resources, and contract with outside service providers to assure all the details are done correctly from the start, like the Bylaws.
  • Set-up the organization with the Secretary of State in the State the organization is located in and make sure updates are filed periodically.
  • Prepare a thorough detailed Business Plan which includes what the organization does, for whom is does it, how it will do it, who are the management team and board members and what are their levels of experience, who are the competitors, how the organization will be marketing what it does, what the organization’s strategic plan is, and the key: how the organization will be funded and what happens if there are shortfalls in the funding.
  • Develop criterial governance policies like code of ethics, conflict of interest statement, whistleblower policy, directors’ roles and responsibilities, gift giving policy, investment policy, internal controls, and record retention policy.
  • Schedule monthly and annual Board Meeting dates and times and hold these meetings using a formal Roberts Rules of Order(2) process. Agendas need to be created prior to the meetings and sent out ahead of time with any related agenda item documents in order that directors may have an opportunity to review documents prior to the meeting. Further, meeting minutes should be taken at these meetings and approved at the next Board Meeting.
  • Create working Committees like Fundraising/Development, Audit, Finance, Nominating, Executive (if needed). Make sure these Committees meet regularly, take minutes, have specific assignments, and periodically report to the Board.
  • Create a Community Advisory Board made up of key visible community leaders, key business executives, and community group leaders who all can be called upon for fundraising assistance, opening doors that may need to be opened and/or providing invaluable information and support about the communities the organization may be servicing. Try to stay away from putting political officials on Advisory Boards.
  • Assure that the organization is properly protected by carrying General Liability Insurance, Hazard Insurance if the organization has a lot of fixed assets, Workers Comp. if the organization has employees, and event riders to these policies for fundraising events like Galas, Hunting Trips, Golf Outings, Trade Show Events, etc.
  • Create budgets and fundraising goals and regularly review and measure actual results.
  • If the organization has real estate, apply with all taxing authorities for a reduced property tax schedule.
  • Hold annual board retreats to develop annual plans and a five-year strategic plan. These plans should be evaluated and adjustments made periodically especially if a major event occurs.
  • Develop a robust communication plan to keep your sponsors, supporters, stakeholders, community groups, and volunteers updated on the organization, events, and developments.
  • Establish a volunteer group that can be available to help with projects, events, manpower shortage, and the like. These volunteers need to be informed and made to feel they are a part of the organization and a valuable resource.
  • Participate in local Better Business Bureau (BBB) non-profit evaluations. Often individual gift-givers check with the BBB to see if the organization has any complaints filed with the BBB.
  • Prepare collateral materials (3) that communicate your messages and what you want others to know about your organization. You want to make sure that your message is in your words to avoid any miscommunication or key details being left out in any communication chain.
  • Develop an annual giving campaign that is geared around some important date related to your organization, like the founding date. You could always use the end of the year date, as some contributors do tax-saving contributions at that time of the year.

Horizon Associates, Inc., founder by Silver Fox Advisor, Dick Hendee, has developed this non-profit organization position paper to provide non-profit organizations some guidance and assistance as individuals set up a non-profit organization and to provide existing non-profits some directional changes or planning ideas if needed Horizon Associates, Inc. does not guarantee using any of this material will result in your organization being able to achieve any specific results.

  • (1) GuideStar/Candid is an information service specializing in reporting on U.S. nonprofit companies. In 2016, its database provided information on 2.5 million organizations. In February 2019, GuideStar merged with Foundation Center to become Candid.
  • (2) Robert’s Rules of Order is the basic handbook of operation for most clubs, organizations and other groups. So, it’s important that everyone know these basic rules! Organizations using parliamentary procedure usually follow a fixed order of business.
  • (3) Collateral material is any media material used to promote a company’s products or services. This includes everything from print materials like posters and flyers to digital content like catalogs and e-magazines. Anything you can use to communicate your company’s brand message is considered marketing collateral.

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Case Studies – Silver Fox Advisors

CASE STUDIES Silver Fox Advisors works with small business owners, CEOs, and entrepreneurs to help objectively solve problems. Drawing from extensive experience, a Silver Fox mentor or advisor provides keen insight to help business leaders solve daily business challenges, make key decisions, and follow through with strategic planning, plan execution, and policy/procedure documentation for the …

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Books

Books by Silver Fox Advisors Several Silver Fox Advisors have written books sharing their business experiences and expertise. These books contain information that you may find helpful to you and your business. We encourage you to click on the icon below to review the listing of these offerings. Houston Legends History and Heritage of Dynamic …

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Shellye Arnold

What’s Happening at Memorial Park?

Houston’s Memorial Park is one of the crown jewels of Houston’s unique culture. Join us on June 25th as we hear from Shellye Arnold, the President & CEO of the Memorial Park Conservancy. The mission of the Memorial Park Conservancy is to preserve, restore, and enhance Memorial Park for the enjoyment of all Houstonians, today and tomorrow. Memorial Park Conservancy is a private, nonprofit organization that operates and maintains 1,100 of the Park’s 1,500 acres.

Shellye joined Memorial Park Conservancy in 2013. Since then, Shellye and the Conservancy leadership team have grown the organization from 3 employees to over 30 and from a $500,000 annual budget to over $30 million in operating and capital expenses. Working closely with partners, Shellye and the Conservancy developed a long-range Master Plan for Memorial Park in 2015; initiated capital improvements and transitioned management and operations of 1,100 acres of Memorial Park to the Conservancy in 2016; and in 2018 secured approval for a plan to deliver over $200 million of capital improvements in Memorial Park by 2028.

Fundraising is underway for this Ten-Year Plan for the Park, with catalyst funding from the Kinder Foundation. This is one of the largest urban park restoration efforts underway in the U.S.  Project Partners in this public-private partnership include the Houston Parks and Recreation Department, Memorial Park Conservancy, Kinder Foundation, and Uptown Development Authority.

The team is focused on:

  • Restoring the Park’s ecological systems and creating greater resiliency
  • Reconnecting the Park’s land, waterways, trails, and people
  • Consolidating compatible uses together in appropriate areas
  • Tending to the land and the Park’s cultural history, maintaining balance through responsible management
  • And enhancing the overall Park experience and amenities

Shellye brings a background in executive leadership and change management from her nearly 20 years at Cisco Systems, Hewlett-Packard, Compaq Computer Corporation and McKinsey & Company. Having studied public policy,

Early Career

Shellye spent the first part of her career with the Texas State Legislature, the Texas Department of Commerce, and the U.S. Department of Commerce. She previously worked as a volunteer in the Dominican Republic, Mexico, Paraguay and Peru delivering public health programs and speaks Spanish fluently.

Shellye holds a BA from the University of Texas at Austin and a Master’s Degree in Public Policy from Princeton University’s Woodrow Wilson School. As a native Houstonian, Shellye cares deeply about Houston’s parks, bayous, green spaces and the wildlife that inhabit them.  Shellye volunteers in animal rescue and from 2011 – 2019 served as a leader for Girl Scout Troop 21, the nation’s only Girl Scout troop composed of women with differing learning abilities.

From the President of Silver Fox Advisors

Silver Fox Advisors’ President Bill Herman stated, “Memorial Park is actually larger than Central Park in New York City and is a Houston gem that is going thru a significant enhancement.  Come and learn about Memorial Park’s long-term vision.”

This special presentation will be held via webinar rather than the Silver Fox Advisors normal meeting format at the Houston Racquet Club. You must register for event by clicking here.

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