The Pitfall of Passing on Costs to your Customers

I mentioned in my recent post “Marketing in a Recession: SMART Marketers Ride the Wave,” that it’s not advised to pass along your costs to your customers during these economically shifting times. I cited a local example of my landscaper raising rates to accommodate for “rising gas prices.” Long story short, although I was pleased with my landscaper of over 2 years, I decided to hire another provider. I found several and settled on one at the same rate I was paying (not the increased rate). I’m pleased so far with their service but really wish I didn’t have to invest the time and energy with a new service provider relationship.

Fast forward to now… and the story is that gas prices are decreasing. Does that mean my old landscaper will try to win my business back again? If so, should I consider it knowing that if another ’shift’ in costs happen my rates might increase? Should I demand that my new landscaper decrase their rates, knowing their margins are increasing, and risk my new relationship? Should I just be happy I am paying what I believe to be the fair market value for this service and avoid the distraction?

It is advised that you provide the greatest amount of value to your customers, moreso than your competitors — always! This simple plan has been proven to increase sales, sustain a leadership position and maintain existing customer relationships and grow new ones. Do NOT, repeat, do NOT, pass along costs to your customers if you can avoid it, especially during econimically shifting times — everyone is experiencing changes and competition is more fierce than ever! Rather, make up for it with personalized service, added value products/services, and other things that make you and your business unique. At the end of the day, a good relationship with your customer will withstand price increases and uncomfortable shifts in business. And, a great customer relationship will evangelize your products/services to other good customers decreasing your cost of sales, improving your margins in the long run.

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