“People don’t mind price increases as much as they mind surprises.” (Robert Cialdini, Psychologist and Business Author)

Costs go up and so do prices. And yet most businesses raise prices later than they should. A global study by Simon-Kucher found that less than a quarter of companies adjust prices multiple times a year as needed, with almost 30% discussing price changes only once annually, and 26% waiting for new customer tenders or contract expirations.

By the time owners take action, margins are stressed and the communication feels rushed. This is unfortunate, because studies show that a thoughtful considered, and timeous approach is the difference between a customer accepting a change and walking away.

“We’ll lose customers if we raise prices”

This fear is common, but it’s not grounded in the research. Studies from the Harvard Business Review note that when customers leave after a price change, it’s usually because the business has stayed quiet about the reason. Silence erodes trust. People assume the worst, even when the increase is modest.

The same study revealed that most customers accept changes if they still see value and understand why the adjustment exists. Communication is key. Your customers should know what costs shifted and what value you’ve added. Keep the message simple enough that a customer could repeat it back without confusion.

“Customers won’t care about the reason”

Owners often assume customers ignore explanations. Evidence says the opposite. Research from McKinsey & Company found that when companies explain the drivers behind price changes, such as rising input costs or service improvements, customer trust remains stable, even when the increase is noticeable.

People don’t need all the details, but they definitely do want you to add context. A short, fact-based explanation helps them understand that the decision wasn’t arbitrary or simply based on greed.

“If we apologise enough, customers will be less upset”

For many owners the first inclination is to apologise to the customer for the added pressure the price changes will have on their lives. Trying to soften the blow with an apology frames the price change as a mistake rather than a strategic choice. Customers may wonder whether the change is temporary or negotiable, thereby weakening your position.

This is all backed up by researchers writing in the Journal of Service Research who note that apologies work best when something has gone wrong. You can acknowledge the impact on customers without presenting the change as an error. Aim for respectful, not remorseful.

“We should wait until the last minute to avoid backlash”

Delaying the announcement doesn’t reduce resistance, it magnifies it. Short notice announcements leave customers scrambling. If the increases catch them off guard this can lead to resentment – something that’s far more likely to lead them to change supplier than the price change itself. Giving your customers timely notice shows that you respect their planning and cash flow.

You should aim to communicate price increases as early as possible. Even a few weeks’ notice can make the shift easier. Use one message delivered consistently across email, invoices, signage, and your website so there’s no confusion.

“Once we announce the increase, the conversation is over”

Many businesses make their price announcement and stop there. Whether from fear of pushback or simply a desire to not discuss it, their refusal to discuss the price changes with customers can often lead to unanswered questions, and confusion, leaving space for assumptions to grow.

Studies from Gartner highlight that businesses with strong post-announcement engagement retain more clients than those who treat the update as a one-way message. You should always be prepared for questions. Have a short script or FAQ ready. Make sure your team is aligned so they answer consistently. A calm explanation helps people adjust without feeling ignored.

“The only way to justify an increase is by adding new features”

Price increases don’t always need to come with updates or added features. Often they simply reflect the realities of the economy. Businesses that fail to keep pace eventually struggle to maintain service quality and people understand that.

This does not mean that you shouldn’t tell customers when price changes are related to improved offerings. Telling customers about upgrades gives them something concrete to weigh against the higher price. Under-explaining value is as harmful as over-explaining it.

“A single announcement will do”

People miss emails. They skim invoices. They forget dates. A single notice is rarely enough, even when well written. When a message is clear and consistent, customers don’t feel overwhelmed. Using multiple channels for communication has been shown to reduce complaints because no one feels blindsided. You should always aim to send your message through two or three channels, spaced out over time. Keep each version short and factual and make sure they each reflect the same message. Clarity prevents conflict.

What’s the takeaway?

Customers respond well when they feel informed rather than managed. They respond poorly when communication is rushed, vague, or emotional. When customers know the reasons behind changes, they are much more likely to stay loyal – even when the price goes up.

If you want help reviewing your pricing structure, chat to us.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.

© AccountingDotNews

“Financial planning causes a struggle between the rational brain and the emotional brain.” (Michael C. Finke, author of Money Management Skills) 

You didn’t start your business to become a psychologist. But understanding the way emotions creep into your decisions could be the difference between plain sailing and struggling to stay afloat.

Entrepreneurs are often painted as rational, profit-driven operators. In reality, money decisions are rarely made in a vacuum. Stress, fear, pride and even guilt, can all shape your thinking. The danger is, emotional decision-making doesn’t feel emotional. It feels instinctive, even responsible. But it can erode cash flow, distort pricing, or block growth, while giving you the false sense that you’re doing the right thing.

The goal isn’t to ignore emotion. It’s to recognise where it’s hiding, so it doesn’t quietly sabotage your progress.

“We set prices by gut feeling”

Pricing should be based on data, not personal sentiment. In reality, neither owners nor customers inherently “know” what a fair price is. Research on psychological pricing shows that people usually assess value by comparison, not by intuition.

When owners set prices based on how they feel instead of cost and market demand, they often undercharge. In short, emotional pricing leaves money on the table. The fix is to base prices on costs, competition, and demonstrated customer value instead of just a hunch.

“Raising prices will make customers revolt”

Price increases make many owners nervous, but fear is often worse than reality. A report from the U.S. Small Business Development Centre found that, when questioned, owners commonly say “I’m afraid I will lose customers if prices go up.”

In practice, customer loyalty depends on quality and service, not just on getting the lowest price. Studies note that some customers might switch if you raise prices – but most (or all) will stick around if value remains high. In fact, a modest price hike often increases profit more than it costs in lost sales. Raising prices at the right time (e.g. after adding value or amid industry-wide inflation) is usually safe and can strengthen a business.

“Our sales will meet this forecast”

Owners tend to be optimistic about sales, but wishful thinking skews forecasts. Sales teams frequently rely on “gut” when updating projections, which breeds overconfidence. In other words, they estimate sales based on hope rather than hard signals. Behavioural finance experts call overconfidence bias “one of the most common issues in financial decision-making”.

The result is frequent forecasting errors: too much inventory, staffing overruns, or cash shortfalls when sales fall short. To counter this, successful owners use data and regular feedback loops. They treat projections as hypotheses to test, not guaranteed outcomes.

“I can do the books myself”

Many business owners feel they must handle all finances alone, but that can backfire. It’s common to believe nobody knows your business “as well as you do,” and thus avoid outside help. This reluctance to delegate leaves owners overworked and stressed. Bringing in an accountant frees up time and adds expertise. Trusting trained professionals with your money management usually strengthens control (and sanity), rather than eroding it.

“We’ll fix financial problems later”

Procrastinating on tough money decisions is a costly mistake. Delaying the reality-checks, like overdue invoices, unpaid taxes, or necessary budget cuts, may feel easier now, but hurts later. Studies of business strategy show that postponing financial actions leads to “immediate cash flow constraints” and lost growth opportunities. For instance, skipping a pricing review or ignoring rising expenses might result in steep interest charges or a cash crunch.

In short, avoiding unpleasant choices compounds risk. The smarter move is to tackle issues early: tighten budgets, renegotiate costs, or adjust plans when there’s still time to gain an advantage.

What’s the takeaway?

Businesses can often counter these emotional pitfalls by simply bringing data and perspective into their decisions. We highly recommend seeking outside input and using structured decision frameworks to ensure actions are taken based on clear reports and forecasts.

Don’t be afraid to doubt yourself. Questioning each emotional assumption and verifying it with facts is the surest way to protect your margins and future growth.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.

© AccountingDotNews

“I do not gather things, I prefer to rent them rather than to possess them.” (Jerzy Kosinski, Polish-American writer)

Deciding whether to buy or lease equipment can sometimes seem like an impossible choice. There are so many factors at play that it can feel like whatever you do will be wrong. We’ve put together a short list of five things to consider that should make the process a little easier.

1. When do you need the money?

Leasing has lower up-front costs than buying, but in the long term could end up costing your company more. Leasing can make it easier to conserve working capital and maintain a stronger cash flow, especially in the early days. However, if you buy, you will eventually pay the equipment off meaning your long-term costs will drop.

2. Are you going to need to upgrade?

Will the equipment you are looking for need to be upgraded? Or is it something you can use, as is, for years? Leasing equipment often comes with the option of upgrading it on the spot when newer versions come out. This gives companies more flexibility and the chance to be fully up-to-date at all times. If you’re sure of the long-term efficacy of a machine, however, it may make more sense to buy.

3. Are there tax benefits?

Some products will provide more benefits come tax time than others with deductions on offer for both leasing and buying. As your accountants we can help you to understand the exact implications of renting/buying your particular equipment and the amount and timing of tax relief that is available.

4. Do you want to pay for maintenance?

Leasing equipment can often mean that you don’t have to worry about maintaining it. While this will undoubtedly be built into the cost of your leasing contract, there’s great comfort in knowing that the maintenance is taken care of – and that if something goes really wrong you can get an immediate replacement. Do just check your lease agreement for any exclusions or restrictions – there is often an exclusion for “damage due to client negligence,” for example.

5. Do you need to customise your equipment?

If you lease your equipment, you probably won’t be able to customise it. It makes sense that the rental company needs to be able to lease the equipment to someone else when you’re done with it. If you own a machine you can generally do with it as you like, meaning you can take care of your special requirements. 

The bottom line

Choosing between leasing and buying ultimately depends on your business’ unique set of circumstances. To get the best advice please consult with your accountant – we’ll be able to lay out all the financial repercussions of your decision.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.

© AccountingDotNews

“The cold, harsh reality is that we have to balance the budget.” (Michael Bloomberg, former New York City Mayor) Budget shortfalls are not uncommon across the public and private sectors,

“Never take your eyes off the cash flow because it’s the lifeblood of business” (Sir Richard Branson, entrepreneur, investor, and author) Cash is king, said one anonymous business genius.