Ways to tackle fast-rising prices
- Maurine La Verge
- How to
- 31 October 2022
- Edited 7 December 2023
- 4 min
- Managing and growing
Inflation and rising energy and raw material prices have a big impact on your business. Experts and entrepreneurs give tips and point out schemes that will help you cut costs so your business stays healthy.
1. Raise your prices
André Jansen, the owner of Risico* Zonder Bemiddeling, increased his rates by 15% in August. “I personally called my regular customers to inform them about the increase. And I did that 1.5 months before I made the increase. All but one responded sympathetically.”
Business consultant Edwin Joosten of Bedrijfsmaat says: “Communication is always key. Be honest. The situation is what it is. If your costs go up, you run into problems, so you have to increase your hourly rate. Tell them that. If your client feels they are paying a fair price despite the price increase, they will be more likely to accept it.”
How to handle fixed contracts?
Tim van Santen specialises in contract law for legal services provider DAS. He explains what you can do if you work with fixed contracts. “In that case, raising prices is more difficult. First, check what is in the agreement. Sometimes there is a clause that lets you raise your prices under certain conditions. This can be difficult with consumers, who are usually better protected, but there are options here too."
"You can include in the general terms and conditions that you are authorised to implement a price increase. This is only possible if you stipulate that you can increase the price within 3 months of signing the contract. As a last resort, you can ask the court if you are allowed to increase your prices due to costs increasing.”
Shorter decision periods
Jos Braspenning of J. Braspenning Aannemers- en Timmerbedrijf introduced 2 more changes besides price increases. “The quotations I send are now only valid for a maximum of 6 weeks instead of 3 months. And the moment I get a confirmation from the client, I immediately commit to purchasing. Fortunately, I have enough equity to finance this. And I use an empty farmhouse for storage.”
2. Make savings
Significant savings can be made on energy costs, usually through simple adjustments. Besides lowering the temperature and turning off lights when not needed, you can, for example:
- Adjust the central heating boiler to be more efficient.
- Adjust the climate conditions per room.
- Let staff work together in one room.
The measures below may need extra investment:
- Use radiator fans.
- Use a smart thermostat.
- Use LED lighting.
Look critically at your expenses and income
Gé Sletterink, a business adviser at KVK, tells entrepreneurs to look critically at expenses: “Do not just start cutting expenses. Determine which expenses help you achieve your profit. Make an overview so you can make good choices. Also, look at loans with high interest rates. If you can refinance a loan at a lower interest rate, you immediately save money. Finally, in addition to your business expenses, it is a good idea to limit your personal expenses as much as possible. This is called bootstrapping.”
Be more efficient and cost-effective
André Janssen tries to work mainly with customers in his region. “I invest a lot in my network here in the area. So I have many customers who live in the region. That saves me fuel costs.”
Other ways to cut costs:
- Not renewing temporary employment contracts.
- Buy from cheaper suppliers.
- Collaborate with other entrepreneurs.
Be more sustainable
According to data from (CBS), 8 in 10 companies are looking at sustainability. For example, by buying solar panels. “By being more sustainable, you cut costs in the long term. Although that does not change much about the costs companies have just now,” says Van den Brenk. Do you want to become more sustainable in the long term? See if you can use government subsidies .
3. Make different choices
Opportunities to make savings can sometimes be found in unexpected places. Adjusting your products or services, consciously choosing different premises or enticing your target audience to shop differently: these are all ways to cut costs.
Loes Konings-van Seggelen runs a cookware shop. Besides buying a more energy-efficient central heating boiler, she is updating her webstore. “I want to offer my customers extra service and let them see what stock I have in my shop via the website. Then customers will not have unnecessary travel and parking costs if they want to come to see a product in my shop.”
Some choices are easy and can be implemented quickly:
- Offer discounts for quicker payments.
- Encourage customers to pay in advance.
- Encourage customers to pay a deposit.
- Offer more service to attract higher-spending customers.
- Remove low-margin products from your range.
Other choices need more time and investment, such as:
4. Make use of help measures
Consider what help schemes you can use:
- Check with your local municipality if they offer an energy allowance benefit.
- Check if you are entitled to other benefits (in Dutch).
- Check if you are eligible for financial support for (Bbz).
5. Find help
Piet van der Vooren, owner of the butcher's shop Slagerij Van der Vooren recommends seeking out other entrepreneurs. “Exchange information and ideas with each other. See if you can do things together. Knowledge is power. The more you know about each other, the more solutions will be available.”
Astrid Ponsioen-Pirets, a business adviser at KVK, also stresses the importance of getting help. “Never be ashamed of your problems. You are not the only one. Talk about your worries. Experts and people around you often see things differently, and therefore come up with different ideas. If you cannot pay your bills or if you are hesitant to continue your business, take action as soon as possible. This prevents problems from growing. And keep your accounts up to date so that you have a clear overview.”
KVK conducted an omnibus survey among 1,000 entrepreneurs in September 2022. More than 80% of those surveyed are dealing with rising costs. Some 40% of those surveyed implemented cost savings. Among other things, they cut back on energy use and started working more efficiently.