Just as the costs of saleable items (such as beer) have increased, so have many other inputs, including energy. Minor cost increases can slip in almost unnoticed. If these are allowed to pass through without reviewing pricing, over time your club’s profits, so essential for returns to members and communities, may be eroded.
CCV recommends regular whole-of-offer reviews to ensure margins are not eroded ‘silently’ through input cost increases.
- The bi-annual price adjustments from CUB provide an excellent prompt to review costs overall – perhaps schedule a general price review around those dates. (Feb 1 and 1 Aug)
- Include all costs – including energy, labour, rent and unit costs of saleable items.
- When reviewing pricing, don’t look at just one item – survey across the board. If you increase just the price of beer (say, because CUB has raised prices) you may be failing to account for very significant cost increase elsewhere.
- Members may react, but by reviewing and raising prices across a variety of sales items, you reduce the chances of specific resistance to individual products and lines.
- Pricing reviews should not be undertaken in isolation – it is absolutely necessary to consider your competitive situation. It is good practice to be aware of what others are promoting, why not ‘get a handle’ on their prices, too?
- If you allow prices to creep up until profits are severely eroded, to the point where large price increases are necessary, you may be faced with far greater resistance than would have been the case had you managed more frequent, smaller increases.
