The pressure is real You've seen the headlines. Minimum wage just jumped to £12.71 an hour. Energy bills are climbing. Mortgage rates are creeping up because of geopolitical shocks. Insurance is getting expensive. Your suppliers are raising their prices. So you're asking: do I pass this on to my customers? Every business owner I've worked with at ALIRA has faced this moment. The answer isn't "yes" or "no". It's "it depends", and I know that sounds like a cop-out, but there's real decision-making in that dependency. Why the automatic pass-through fails I've watched people raise prices across the board because their costs went up, and then lose market share to competitors who didn't. That's not always because the competitor is smarter. Sometimes it's because they couldn't afford to raise prices, so they had to find efficiencies instead. And sometimes they discovered their margin was bigger than they thought. The mistake is treating price increases as a mechanical response. Cost goes up, price goes up. Done. That's not business thinking. That's abdicating. Here's what actually happens when you pass costs straight through: you signal to customers that you have no control over your business. You're just a middleman. And if you're just a middleman, you're replaceable. That's dangerous when your market has options. Look at what's happening with Rightmove right now. Estate agents are in a class action because they feel the fee increases are excessive. They feel trapped. That's a positioning problem, not a cost problem. Rightmove raised prices because it could, not because it had to. And now it's in court. What actually matters Before you raise a single price, answer three questions honestly. First: where is the cost increase actually hitting? Is it labour? Energy? Materials? Logistics? Each one requires a different response. A wage increase affects different businesses differently depending on how labour-intensive you are. An energy spike hits a manufacturer differently than a consulting firm. Get specific about where the money is going. Second: can you absorb some of it? I know that sounds impossible when margins are tight. But I've seen people run the numbers properly and realise they can take a 0.5% hit to margin for six months while they restructure something. Maybe you cut a meeting series. Maybe you renegotiate a supplier. Maybe you defer a non-critical hire. These aren't fun conversations, but they're cheaper than losing customers. Third: will your customers actually pay more? This is where people get vague. They say "my market is price-sensitive" as if that settles it. No. Some of your customers are price-sensitive. Others aren't. Some are locked in and will pay anything. Some are shopping around and will leave at 3%. You need to know which is which. The real decision framework If you're going to raise prices, do it strategically, not defensively. Defensive pricing is reactive. Costs went up, I'm raising prices by the same amount. That's what everyone does, and it's usually wrong. Strategic pricing is: I'm raising prices because my value has increased, or because I can segment my market differently, or because I've found efficiencies that mean I can absorb some cost and still improve my position. It's forward-looking. Here's an example from a client I worked with last year. Their energy costs jumped 18%. Instead of raising prices 18%, they looked at their customer base. They had five big contracts and 40 small ones. The big ones generated 70% of revenue. They negotiated two of the big contracts up by 12%. They left the small ones flat but changed the terms to reduce service complexity, which saved them money elsewhere. Net result: costs up 18%, prices up 6% on average, but profitability actually improved because the mix got better. That's not magic. That's thinking. The timing question Right now there's unusual economic uncertainty. The Bank of England is warning about supply shocks from geopolitical risk. Mortgage rates are potentially heading higher for 1.3 million households. Consumers are already stretched on council tax, water bills, energy. The chancellor is meeting supermarket bosses about price rises and shortages. This is not the moment to raise prices because you can. This is the moment to be very careful about what you do, because customers are already making trade-offs everywhere else in their lives. If you have to raise prices, do it now while you can explain it as a response to genuine external pressure. Don't wait six months and try to justify it then. But be precise about which prices and why. What to do this week First, run the numbers properly. List every cost category that's increased in the last six months. Work out the total impact as a percentage of your revenue, not as a feeling. You'll probably find it's smaller than you think, or it's concentrated in one area you can actually do something about. Second, segment your customer base by profitability and price sensitivity. Use a simple Decision Matrix if you need structure. Who can actually absorb a price increase? Who will leave? Who hasn't been raised in three years? This tells you where you have room to move. Third, before you raise any price, identify one efficiency you could implement instead. Could you batch a process differently? Reduce a service layer? Change how you deliver something? You don't have to do it, but knowing you could is powerful. It gives you options.