As we move into 2025, many New Zealand businesses are facing rising costs, shifting customer expectations, and economic uncertainty. Reviewing and adjusting your pricing strategy is essential to staying competitive and maintaining profitability. But how do you know if it’s the right time to revise your pricing? Here’s what you need to consider.
1. Review Your Costs
Inflation, supplier price increases, and higher wages can all erode your margins. Start by conducting a detailed review of your expenses, including raw materials, shipping, rent, and labour. If your costs have increased significantly, maintaining your current pricing could mean lower profits—or even losses.
Ask yourself:
Have supplier costs risen?
Have wages or overheads increased?
Are there hidden costs that weren’t there last year?
If the numbers show that your profit margins are shrinking, it may be time to raise prices.
2. Understand Your Market Position
Your pricing should reflect your brand’s position in the market. If you’re a premium provider, your customers may expect (and accept) price increases in exchange for high quality. If you compete on affordability, a sudden price jump could push customers toward competitors.
Research competitors to see if they have raised their prices. If others in your industry have increased pricing, it’s a sign the market can bear a rise, and you won’t be out of step.
3. Gauge Customer Sensitivity
Not all customers react the same way to price increases. Some industries—such as hospitality and retail—are more price-sensitive, while others—such as specialist services—may have more flexibility.
Consider:
Will your customers accept a price increase without much pushback?
Would offering tiered pricing (e.g., basic vs. premium packages) help retain different customer segments?
Can you add value to justify a price change, such as improved service or extra features?
4. Test Different Pricing Strategies
If a direct price increase feels risky, there are other ways to improve profitability:
Gradual increases: Small, incremental price rises are easier for customers to accept.
Bundling services: Offering packages can encourage higher spending while making price increases less noticeable.
Adding premium options: Introducing a higher-tier product or service at a premium price can boost revenue without affecting existing customers.
5. Communicate Price Changes Effectively
If you decide to raise prices, how you communicate matters. Be transparent and provide a reason for the increase, such as higher costs or enhanced services. Consider offering existing customers a transition period with old pricing before the new rates take effect.
Final Thoughts
Revising your pricing isn’t just about increasing rates—it’s about aligning your prices with costs, customer expectations, and market conditions. If your margins are tightening, competitors are adjusting their prices, or customer demand allows for it, a strategic price adjustment could strengthen your business for 2025 and beyond.