I went to fill up the car with fuel yesterday. Now don't even get me started on the electric car versus the diesel car. The simple fact is we do not drive our car often enough to upgrade to an electric car.

Filling up the car with fuel is not something I do very often anymore, mostly because these days I don't actually drive very much. I am very lucky to live in a walkable neighborhood. So between walking and my e-bike, my car doesn't actually get out a lot, but it was due for a fill up and I was heading to the local shopping mall, so I ducked into the local fuel station to fill up.

Now, even though I don't fill it up very often, I know that it normally costs around about $80 to $90 to fill up the tank. But as I sat there filling up the fuel, occasionally looking at the bowser, thinking, looking at the bowser, I realized that the price, the numbers were just going up and up and up. It went to 90, it went to a hundred, it went 110. It went past $120. I was honestly expecting that fuel to come gushing out and that the bowser had to be broken.

Now, you might be laughing at me right now, but I don't fill up the car very often. I have never been in a situation where it costs a hundred more than $120 to fill the car up with fuel.

Hey there, and welcome back to the Bringing Business to Retail podcast, where we dig all into the nitty gritty of understanding exactly what it takes to run and grow a profitable retail or e-commerce business.

So as you're listening to this, I would love to know, are you driving to work? Are you packing orders? Maybe you're at the gym or maybe you're folding washing, or you're doing that thing where you put your earbuds in so that nobody talks to you. If you are doing any of those things, I see you wherever you are.

I can guarantee that, you too, have honestly felt at some point in the last month that you have sat at a cash register or you have gone to pay for something and you thought, “hmm, that's more than I was expecting.”

And the truth is, you and I, my friend, we have to be, have a frank conversation. We have to be able to talk about something that I know that you probably don't wanna talk about. It's money. And it's something that I think a lot of retail and e-commerce store owners are probably stressing about right now and nobody is talking about it nearly enough. And I'm really surprised at this because I see on social media algorithm feeds me the information that I'm looking for, and I'm not seeing an awful lot of people talking about this, what is it?

It's pricing, specifically raising your prices, and I know, I know just saying those two words probably makes something in your stomach clench a little bit tighter because pricing is one of those topics that brings up so many feelings for store owners.

I know it brings up a lot of resistance and it brings up a lot of fear, and I know this because I've had these conversations firsthand, and I want to get into all of that today because I think the way that most store owners are thinking about pricing right now in this economic climate with everything that is happening in the world is honestly going to cost them. It is gonna come around and bite you in the butt very, very quickly.

And the reality is, if you do not confront this now, the damage is only going to continue to compound exponentially. So here we are. This is what we talk about, and this is where I want to start.

Interest rates have gone up, fuel costs have gone up. The price of freight has gone up. The cost of getting your shipping to the customer has gone up. The cost of goods from suppliers has gone up. Your electricity bill, if you haven't already got it, I can almost guarantee you it is going to go up. Your rent review is probably going to come in higher. The wages that you are paying your team are more than likely going to have to go up. Everything is going up. You know this, I know this. We are all living it.

The question I want to ask you is this, where is that cost going? Because it has to go somewhere. It doesn't just disappear when your supplier puts their prices up, when your freight costs more, when your overheads increase, that money has to come from somewhere. And what I am seeing over and over again is that it comes from one place, and right now what I'm seeing is businesses like yours are taking it out of their own pocket.

This is where I need to ask you, where is that money coming from? Because what most people don't realize about a cost increase like this is it doesn't hit you at once.

If you listened to last week's episode, you heard about Teresa, who is telling me that she's still paying tariff bills nearly a year later. This is not going to go away when the headlines do. If the strait opens up tomorrow, your prices aren't gonna magically drop.

So let me give you a really practical example of what I mean. Let's say that your freight costs go up today, right now because fuel is up, your freight company goes and puts a surcharge on, and that means that everything that's coming into your warehouse or everything that is coming into your store is going to cost you more to get it there. So let's say you place that stock order today. That order takes, let's say eight weeks to arrive. You receive it, you price it, you put it on the shelf, or you list it on the website, and then it maybe takes another four to six weeks to sell through. So what are we at all together? We're like eight or ten to twelve weeks.

So by the time that that stock has actually turned into revenue, it could be four or five months down the track, and maybe by then fuel prices have gone down a little bit. Maybe the headlines have moved on. Maybe people are talking about all the things that are happening a lot less, but here's the thing, you cannot reprice that stock downwards because the market has shifted because the stock cost what it cost you when you bought it. The freight surcharge has already been baked in. The cost is already sitting there in your inventory. And if you price it based on where costs are right now rather than where they were when you ordered it, so when I say right now, I mean in the twelve weeks from now, when you go to sell it, you are going to lose money on every single sale.

This is where the argument about fuel comes from, people always say, oh, but the fuel price went up, everybody put their fuel up, but they didn't pay for that fuel at that cost that's sitting in their tanks. It's like, no, but at the other end, they did. At the other end, when the price goes down, the fuel in their tank, they bought at the higher rate. So you win some, you lose some, and that is exactly what you need to be doing right now.

So this is what I mean when I say the effects of this are going to be felt - economists are saying at least twelve to eighteen months - because this is not a one-off spike that passes through and then everything goes back to normal.

Fuel touches everything. It touches how much it costs to manufacture goods. How much it costs to get your goods from your supplier to your warehouse, from the warehouse to a distribution center, from the distribution center to your door, from your door to your customer's door. And every single step of that chain has a fuel cost embedded in it. And so when fuel goes up, those costs go up at every single one of those steps along the way, not just one point, at every single one of them. And it generally happens all at the same time.

And then there's the sticky pricing problem, because once - we saw this in COVID - once a freight company puts a surcharge in place, or they just bake the price into their regular rates and put their rates up, once a supplier has adjusted their pricing to account for their higher inputs, I don't know about you, but I didn't find that those prices just snapped back the minute that things eased off.

I don't think we're going to see prices drop dramatically once the fuel price dips because the businesses that raise their prices to protect their margins don't lower them because one input cost moved. I'm going to go out there and say they're going to hold them because they have the same issues where they have this compounded effect of the pricing that has been adjusted before they received the product, or they got it to the warehouse, that that doesn't automatically disappear. But they're also going to be managing rising wages, rising electricity costs, rising everything else. And those things don't generally go back down. So even when fuel stabilizes, the pricing downstream from that doesn't immediately follow. And honestly, it may not follow much at all.

So meanwhile, if you are still sitting there with stock on your shelves that cost you more to get it than it did a year ago, the freight costs that are locked into those contracts that your supplier negotiated, someone's business either needs to absorb it or needs to flow that onto the customer somewhere. That cost has to be accounted for, and we do not want that cost to be you absorbing it because most of you listening cannot afford to do that.

So that brings me back to the question, where is that cost coming from? I don't think it can be your pocket. A business is designed to make money. That is it, the whole premise. You are not running a charity, you are not running a community service. You are running a business. And a business that doesn't make money is not a sustainable business. No matter how beautiful the product is, no matter how loyal your customers are, no matter how hard you the owner works.

So when I hear store owners saying, I can't raise my prices, my customers won't pay more, I'm gonna push back on that because what you are actually saying is, I would rather that I make less money than risk losing a customer or a customer being unhappy about a price increase.

And I understand that impulse because I have felt that too. The reason I do this podcast is to share with you all of the mistakes that I have made so that you don't have to make them as well. I have been through a global financial crisis. I have seen this happen, and what I'm telling you is that you can't afford to absorb that cost.

Retail and e-commerce store owners, I have to say as a group, are some of the most customer focused and caring people I have ever met. They want to look after their customers. They do not want to feel like they're taking advantage, but here's what I also want you to consider. Your customers are living in this economy. They are the same people who are standing at the fuel bowser watching those numbers go up. They're the same people who are handing over their cards in the grocery store and they're tapping and the bill is higher. Their mortgage repayments have gone up. They are not sitting in a bubble untouched by everything that is happening, expecting the world around them to stay the same price while their costs go up. They know things cost more. Right now, everyone knows that things cost more. Right now, it is not a secret.

The store owner who raises their prices appropriately, who adjusts for the reality of her cost base, who runs a profitable business that is still going to be there in two years - they're not betraying their customers, they're just making sure that they can keep serving the customers.

You might feel like you're doing right by your customers in the short term if you don't increase your prices. But let's look at it this way. If your business closes or if you burn out because you are working more hours so that you don't have to pay your staff, if you have to walk away from this business, your customers lose anyway.

I wanna talk about the other side of this because there's something else that I see happening with pricing that I think is even more costly than being scared to raise prices. And that is the store owner who genuinely has no idea that their pricing isn't working.

So the first scenario I was talking about, you know that you're absorbing these costs, you are feeling the pinch. But on the flip side, there will be people listening who don't actually realize that their pricing is not profitable or it's not going to continue to be profitable. Now that's not because they've made bad product decisions, it's because they haven't stepped back to look at their business. They haven't gone in and actually examined whether the prices that they've set, maybe you put it in your POS or your website, maybe six months ago or even a year ago when the costs were completely different, they haven't gone in to see if those numbers still make sense.

They're looking at the sales that come in and think, oh yeah, people are still buying, things are still selling, we're still busy. But they don't actually realize that the pricing, when you put it under a microscope, when you look at the cost of goods, the cost of freight, the overheads, the wages, the time, the mortgage, the interest rates, those numbers don't make sense anymore.

I have sat with store owners who have shown me their best selling product with genuine pride. This is the one that moves the most, the one that the customers love, the one that they say is the backbone of the business. And when I've looked at the numbers with them, the real numbers, not the feel good story, but the actual numbers, the margin on that product has been almost nothing. I'm sad to say in some cases, they were actually paying their customers to take, to buy those products. They were operating at a loss on their best selling product.

The reality is independent retailers can very rarely afford to have loss leader products.

Now these business owners that I'm talking to you about, they're busy. They're selling product. From the outside, they look successful. What I can also tell you is they work incredibly hard. But because that pricing had been set sometimes years ago and never reviewed, because those costs had crept up incrementally and they hadn't adjusted their prices with them, or in some cases they might just put their CPI, let's just put it up 2% increase, because somewhere along the line, the numbers stopped working and nobody was looking at the numbers. Nobody caught the fact that they actually weren't making money.

And this is the most insidious version of this problem because at least the store owner who is scared to raise their prices knows that they need to raise them. They've made a conscious, well conscious decision not to raise their prices. I'm not saying it's the right decision, but it's a choice. But the store owner who doesn't even know that their pricing is broken - they work hard, they see sales, they think they're doing okay, but underneath the business is losing money and they don't even know that they're losing.

I share this story not to shame anyone, but because I have sat here at this desk and had this conversation too many times.

Your numbers don't have feelings about your customers. They don't have opinions. They don't care what people should spend or shouldn't spend. They just show you what's happening. And right now what's happening in a lot of retail and e-commerce businesses is that the numbers are quietly getting worse while the business owner stays focused on the surface of just pushing, pushing to get more customers, pushing to get more sales.

So I know the fear is there. You are thinking, if I raise my prices, I will lose my customers. You probably will, but which customers will you lose? Because in my experience, the customer who leaves when you raise your prices is almost never your best customer.

Your best customers, the ones who love what you do, who come back again and again, who tell their friends, who genuinely value what you have to offer, they are not as price sensitive as you think they are. The ones who leave tend to be the bargain hunters, the ones who were always going to move on when something became cheaper. The ones who were never loyal to you, they were just loyal to the price, and losing those customers, while it does sting in the short term, it's often not the loss that you think it is because what you are left with is a customer base that actually values what you do, and you end up with customers who are prepared to spend money. And they're prepared to spend money with a business that is making money, serving them, and this my friends, is a much better place to be. You don't wanna be a busy business that isn't profitable. You want to be a busy business that is profitable

Now, I also wanna say this, how you raise your prices matters. I don't think you should apologize for raising your prices. I don't think you need to give people a long explanation of what's happening in the world. I mean, we don't go to the grocery store and there's explanations about why everything has gone up in price. It just is. Your customers don't need to know about what your freight invoice looks like. They don't need a breakdown of all of your costs. What they need is your confidence, your clarity, and your value. Here is the price. Here's what you get. Here's why it's worth that price. That's it.

You do not need to justify your pricing, and you do not need to apologize for it, but you do need to stand behind it because if you don't believe your product is worth the price, you cannot expect your customer to.

The cost of running a retail or e-commerce business right now is not what it was even three months ago, and it certainly isn't what it was a year ago. The world has changed, the cost base has changed, and a business that doesn't adapt its pricing to reflect the reality is not going to be able to sustain itself. Now, this is not doom and gloom, it's just math.

You are allowed to run a business that makes money. You are allowed to charge prices that work for you. You are allowed to adjust for reality and still make a profit.

If your business doesn't make money, it can't survive, and if it can't survive, it doesn't serve anyone. So the most customer focused thing you can do right now is to make sure that your business is financially healthy. Look at your numbers. Really look at them. Look at the invoices as they come in. Know your margins. Know your cost of goods. Know what your freight and your packing and your wages and your overheads are actually doing to your bottom line today. Not what they were doing three months ago. And then make a decision.

Don't make a decision based on fear. Don't make a decision based on what you think your customers will think. Do it based on what your business needs to be sustainable.

You didn't start a business to work this hard for a margin that doesn't work. And your customers, the ones who are genuinely your people, they will still be there for you next year. They will still be there for you next week. They do want to keep buying from you. The best thing that you can do for them is to make sure that your business makes sense.

Now if any of this has landed for you, if you have heard yourself anywhere in this episode, you'll have already realized that when you increase prices, you are going to lose some customers. I mean, that's just, that's just retail in general, but I promise you that there are others out there that are just waiting to discover that you exist and they aren't going to do that unless you are marketing.

Now, if I've said that and you have inwardly cringed, then I might just have something for you. It's called the Marketing That Works Bootcamp, and I built it for store owners who are overwhelmed by how much they feel they should be doing, who are scattered across many platforms, whether it's TikTok, Facebook, Instagram, email, all of the things. They feel like there are so many tactics out there and none of it is connected. For business owners who are posting and emailing and running sales, but still not seeing consistent results.

The bootcamp is built around one core idea that campaigns are the driver of consistent sales, not more content, not more platforms, not even necessarily more ads. Campaigns, intentional, planned, purposeful campaigns that give everything else that you're doing a reason to exist. When you understand how to build your marketing around a campaign, something really significant changes because your emails get so much easier to write because you know what you are writing for. Your social content stops feeling so difficult because it has a purpose, it has a direction. Your customers have a much clearer reason to buy from you right now. Not next week, not next month, but right now. And your revenue starts to feel less like something that just happens and more like something that you can control.

Now, this is a live bootcamp. Yes, we do this live. It is paid. It is $47. It is for established retail and e-commerce store owners who are tired of results that feel like they are hit and miss and they're ready to understand what needs to change to have marketing that actually works.

If you've been listening to this podcast, I'm pretty much a “done what it says on the box” kind of person. Maybe I'm just not creative with names, but I really like names that just tell me what it is, and that's what this is - Marketing That Works Bootcamp.

If that's you and you want to have access to early bird pricing, get yourself on the wait list. The link is in the show notes, but you can head over and register right now at marketingthatworksbootcamp.com. Yes, exactly like it says on the box, marketingthatworksbootcamp.com. I cannot wait to see you there.

So that's a wrap. I'd love to hear what insight you've gotten from this episode and how you're going to put it into action. If you're a social kind of person, follow me at the Salena Knight and make sure to leave a comment and let me know. And if this episode made you think a little bit differently or gave you some inspiration or perhaps gave you the kick that you needed to take action, then please take a couple of minutes to leave me a review on your platform of choice.

Because the more reviews the show gets, the more independent retail and e-commerce stores just like yours, that we can help to scale. And when that happens, it's a win for you, a win for your community, and a win for your customers.