Mentoris writes: Pricing- art or science?

In my own time as a practice owner and more recently as a coach to independent practice owners, the pricing of goods and services is often based on either a standard mark-up, matching the pricing of similar businesses, or taking a guess at what is viable. 

It is now a year since inflation hit 9%, and estimates suggest that the figure will likely remain between 5% and 10% for some time. This poses a challenge for optical practices, who have seen their products, energy, consumables and staff costs rise. Against the backdrop of the cost of living crisis, practice owners are deterred from increasing prices, fearing they will drive their patients to find cheaper options to correct their vision.  

The net result of this is downward pressure on practice margins and, hence, lower profits, which in turn reduces the amount that can be reinvested in new equipment, staff development and other activities that will grow the business. In fact, it is important to remember that inflation is a natural part of the economic cycle and, hence, if you do not adjust your prices to keep up, you are reducing your prices in real terms.