It was one week into the flood and I had already seen one grocery/convenience store owner thrown in jail for price gouging. On the other end of the spectrum, I had a call from a client where half of their workers didn’t show up to work, assumed to have found a more lucrative opportunity for a premium wage rate during this crisis.
As a small business owner, what do you do?
Wage rates are increasing by the day as companies scramble to find crews and workers to get their businesses up and running. The recovery efforts create a whole new demand for labor further stretching and raising the price for the current supply of people available in the Baton Rouge and surrounding areas.
Baton Rouge business owners are in a crunch.
If I don’t start paying my team more I will lose them.
I need to start ordering supplies, before they become back-ordered.
I don’t think there is one specific right answer, but as a Christian in business here are some points to consider:
- We should keep our prices the same, or even help by discounting, if we can do that and keep our margins and business healthy.
- We must be competitive with our wages and keep our business staffed; therefore, a short-term pay increase for specific positions that will be under great demand may be necessary. However, you may try to provide other benefits to keep employees loyal (i.e. guaranteed hours, help with their own home and family needs, other benefits like health insurance and paid vacation). Most of the increased pay opportunities are going to be somewhat temporary.
- If your cost of services is increasing substantially in labor costs or materials, you may have to consider a price increase to cover them. This is not gouging, this is trying to stay competitive in a rapidly changing economic environment.
I know it is difficult to wade through the daily decisions and be true to your Christian values while being a good steward of your business and employees. Decisions must be made though and the market is changing so quickly that you may be required to make these decisions without full information and analysis.
Everyone’s situation is different and more than one strategy will work. It depends on your circumstance. Just like in a normal economic market we tend to have different pricing strategies. Some are:
- Low price to go after volume
- Higher price with more select, fewer clients but higher margin
- Competitive market rates with differentiation through product or service benefits to the customer
As you are deciding on necessary changes to your pricing model, consider your Christian values as part of the process:
- No strategy should include price gouging.
- It is okay to keep your business alive and take care of your family and your employees and their families.
- Increasing prices due to real increase in cost may be necessary.
Pray daily for guidance as you go forward. The Holy Spirit will guide us through this and if we stay true to His leading we can trust that we are making the wise decisions.