Arguing for a price hike is never going to be popular.

I copped a hammering in the local media recently after commenting on a council draft management proposal.

One particular highlighted item is a proposal to put the price of water up to $1.53 a kilolitre, a rise significantly above the CPI.

I was silly enough to do a media interview and say residents in our city had bought 1311 kilolitres of bottled water last year at $5000 a kilolitre, averaging about $159 a resident on bottled water. So maybe $1.53 wasn’t so bad after all.

Water prices had gone up only marginally over the last few years – so surely it was OK to put it up more than CPI this year, as we’d enjoyed cheaper prices over the last few years? My last argument was that we paid less for water than all the surrounding councils, so surely the price increase seemed justified.

How wrong I was, said the comments section for the local newspaper. “This just shows us that Dickerson lives on another planet to ordinary people. How can one make a comparison between these two totally separate issues?”

Bottled water and tap water are totally separate issues?

One comment took the cake. “I have suffered kidney stones mostly in part (sic) to drinking town water.” So now I was hatching a plot to keep our doctors in work!

I sat back to think on the reaction and what Council might have done differently. The reality was that residents were using less water. Why? It finally rained. For many years a lack of rain resulted in more water usage; when it started raining a couple of years ago, residents, not surprisingly, used less water.

Multiple campaigns at various levels of government to be water wise brought the result everyone had wanted – less water consumed. If there was a mistake made by Council, it was that the price of water hadn’t gone up enough in the last few years. Despite only marginal increases, and water being cheaper than surrounding areas, residents don’t want to hear it. All they see now is a “huge” increase.

And that brings me to a point. When the new financial year ticks over next month, put your prices up! Clients will accept small increases on an annual basis more easily than a large increase every few years.

I made a mistake early in my business career of thinking clients were always after the cheapest price. We tried to leave our labour prices the same for years. When we finally had to put prices up, they had to go up by over 10 percent.

We would send out a client letter to explain how nice we had been with no price rises, but all that was lost on our clients. They could only see the news that prices were going up by over 10 percent.

Clients are much more accepting of an annual increase around the CPI rate. Even last year, in the middle of a GFC, we put our prices up to stay ahead of inflation. We match our price increase with a wage increase to ensure our staff are being paid at levels that at least match inflation.

Clients may not click their heels with joy at a price increase but they view your business as professional. As much as they want to pay lower prices, clients really want confidence your business will still be there next week and next month and next year as they continue to need your services.

When a business closes, you don’t hear ex-clients say how wonderful it was that their prices were really cheap. They become annoyed and even angry that their supplier of choice is no longer available.

The modern consumer has a much better understanding of the machinations of business. When you tell a client that because you want the best staff to look after them you need to keep their pay in touch with inflation, and therefore prices will go up each year, they are accepting. And once you train your clients to expect annual price increases, it becomes a complete non-event.

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