Recently I noticed a news item that mentioned “unexpected” mid-season price increases coming down the pike at those of us in the industry who buy products for our pool and spa building, retail or service businesses. It seems lately every few weeks we see in the news “unexpected,” somewhat alarming economic news, and all of it seems to be negative. Unexpected — by whom? Sadly, this is not “unexpected” by anyone who did business during 1977-1981. These were the years the concept of “stagflation” first turned Keynesian economics, the accepted economic theory many of our professors told us was gospel in college, on its ear. Inflation and a stagnant economy was, according to this theory, not supposed to happen at the same time — but it did. Many of us old folks remember that we could not raise our prices fast enough to keep up with the constant increases in price we were barraged with by suppliers, the gas lines were long, and the “misery index” was high. Yes, boys and girls, not only high gas prices, but lines to get it. It was difficult to keep ahead of it. Unfortunately, the handwriting is on the wall and I am seeing deja vie all over again with this “unexpected” little bit of news that flew by almost unnoticed in our industry. Many of you do not remember the “bad old days” of stagflation and may not realize what is coming at you so “unexpectedly,” but this time, maybe we can get ahead of the curve with some industry-wide “proactive” pricing. Since business has been and still is somewhat stagnant in many parts of the country, the temptation is to cut prices to gain more business. However, this can be exactly the wrong strategy in a stagflation economy. One of the most useful seminars we ever attended proved to us mathematically how destructive price-cutting could be and how much increase in volume one had to make up to even break even. The details of the math, never my strong suit, are lost to me in the mists of time, but the lesson left an indelible impression. I remember my husband and I went back to our business and raised prices, and it saved us back then. Bill Markert, a long-time icon in the industry, and a friend of his developed the “lumberteria” concept of marketing and held this seminar, and I will always be grateful for their wise advice. I am seeing the time coming upon us EXPECTEDLY to raise prices now! Higher gas prices, increased regulations heaped upon the big folks we buy from, higher health care costs coming down the road at us, and the general uncertainty of cost of doing business ALL scream inflation and stagnation loud and clear, to me. Be aware, and price proactively. It’s later than you think!
