Recently, our CEO, Rickie Sehgal had the opportunity to share his thoughts on managing price rises and how Transputec Ltd are approaching this.
Thanks to Josh Budd and Douglas Woodburn over at CRN UK, Rickie was able to share his predictions and approach for 2023.
Rickie Sehgal quotes “Businesses across each industry are facing this issue alike, and I believe the best way to support economy and stabilise the market is to hold off raising prices as of now.”
Read further for Rickie Sehgal’s tips and strategies for dealing with this issue.
Vendor CEOs have been vocal about the need to raise prices and have advised channel partners to do the same. Looking at both the products and services you offer, how critical is the situation for your business?
I don’t agree with the American based CEOs suggestion that we start to raise prices. This might be OK for the USA but it is counter-productive for the UK. Sure, we all want to raise prices, but it’s a little too early in my opinion and we should hold back at least until the New Year. It would be wrong to raise prices now and destabilise further the already unstable market by kick starting a deep recession which will lead to an increase in unemployment to add to the miseries of working people.
To what extent do you expect to absorb recent/ongoing cost increases around headcount and hardware/software prices, at least in the short term?
Our Board is unanimous on this decision. We plan not to increase prices whilst monitoring the situation until the New Year. However, we are doubling our efforts to speak to all our staff about the market conditions, improving their job security against turbulent times ahead. We plan to assist those who are the most vulnerable with financial support whilst resisting general salary increase demands.
What’s the right approach…should price rises be done in one go, or in stages, for instance, and to what extent will your strategy vary when it comes to consultancy, managed services and product resale?
There is no one simple solution that will deal with the different parts of the business. Our business can be split into three main categories: hardware/software, managed service contracts and professional services. Price increases for managed service contracts will be the most challenging because they are all unique, some with different inflationary increase provisions and different renewal anniversaries. Our clients are in the same boat, they don’t want to pay more and pass on increases down the chain.
We are going to take a longer-term view on the professional services and resist increases and monitor the situation until quarter four. The hardware and software prices are likely to be passed through to the clients as the vendors increase their prices to us. I suspect initially margins will reduce because of increased competition and some cost abortion capability.
HPE’s CEO recently described HPE as a ‘market leader’ when it comes to price rises. Is it better to lead or follow?
I don’t agree. Leading a price increase charge may be OK for some but not for us. Transputec values loyalty of their staff and clients over the short-term profit downturn. We are by nature a prudent company, and this has served us well over the past 35 years.
When dealing with big increases in your overheads and the price of the products you carry, what’s your top tip for protecting margins while – at the same time – keeping customers happy?
Over-communicate with your staff and help where needed, address the individual needs of the most vulnerable first, personalise the support that you offer to each person in need ,cut waste in your organisation to improve operational efficiency and lastly maintain loyalty and share the pain with your staff and clients. Rickie Sehgal shared along with seven other leading industry experts.: Scott Nursten Etienne Greeff Rye A., Darren Beasant, Chris Gabriel, Guy Hocking and Rob Quickenden. Their insights can be read in more detail here.