There is an undercurrent creating a bit of uncertainty in business. It's the cost of doing business. I call it the “Chaos-Commerce Economy.”

I have a lot of subscription tools that I pay for every month. They range from Grammarly to Blubrry (podcasting storage), from Acuity (meeting scheduling) to Zoom, Fathom, and other meeting tools. There is Dropbox, Active Campaign (email), and many others.

Like death by a thousand paper cuts, many of these are incrementally increasing prices. Some are 10% while others are up to 25%. You don't feel the paper cut because there is no paper – they send you an email, and if it does not go into the promotion folder, you have been warned. Otherwise, it just shows up monthly or yearly on your credit card.

QuickBooks Desktop has increased its pricing this year, from approximately $300 every other year for upgrades to over $1000 annually to keep your license active. They want you to switch to QuickBooks online, but I don't trust any company to have all of my financial business data in the cloud. So I have no choice but to pay 10 times more for a product that really has not added any income, benefits, or features that improve my business.

I have seen a monthly increase of around $500 per month over the last year or so.

At some point, the added expense of eating or absorbing the cost starts to hurt your profits and bottom line.

But how long can you go on before you have to pass the added costs on to your clients? How will they react? What if they can't afford or don't want to pay more for the same products or services that you have provided for years?

AI Everything

Part of the increase justification is that we have enhanced our product with AI. AI has become the “Now fortified with 8 essential vitamins and iron!” marketing ploy with online subscription tools. You can't choose to add AI or not; it's just there.

I don't need AI with all my writing tools, graphics tools, social media, and email tools. I already pay $20 a month for Perplexity, which helps me write, and now creates images. I don't need Facebook or LinkedIn to use AI to write my posts. My computer and Grammarly already check my spelling and grammar. I don't need an AI assistant to book my meetings, record my meetings, and transcribe my meetings. I have a tool that does that already for all programs.

It becomes a full-time job if you rely solely on each platform's AI to perform those tasks just to save a few dollars. Trying to integrate each to create a desired result is a challenge that can be both frustrating and annoying.

If I wanted my subscription tool, “Fortified with 8 essential AI Actions and Content!”, I would appreciate the option to opt out and save money and time. But alas, these products are marketed to the mainstream and the masses. I actually live and work in the margins.

Products

Although it's a bit dicey, I think raising prices on products is a bit less complicated. You can always blame the manufacturing or tariff increases on the price hike. And often you don't need to inform the consumer.

One day, I walk into the grocery store and my bag of Starbucks ground coffee is $15. The next time I buy it, it's $19. I could choose to buy a cheaper brand, but I just harrumph and pay the difference. Then I feel like I won the lottery when it goes on sale for $15. It creates a new normal that you adjust to.

Product-selling companies also face rising costs of doing business, similar to those faced by service companies. It could be salaries, insurance, accounting, and more. It's hard to keep up with all of that and still make a profit. There comes a point where a business cannot just keep eating the increasing prices coming at it from all angles.

Speaking of eating costs. Fast food used to be about convenience and lower prices. Now you go into a sub shop and you can pay almost $50 for a meal for two. So if it's costing you more to feed yourself and your family, you have to make more to be able to afford it.

Services

Services tend to be a bit more pliable when it comes to pricing.

If you reduce prices to attract a customer, you must clearly communicate that this is a discounted version of your standard pricing. You can keep costs lower as long as you still make a profit, but there will come a time when you can't continue servicing that customer at discounted pricing.

You can let the customer know that it's a limited-time deal (like 3 months) or introductory pricing. Let them know up front what the regular pricing will be in the future. That will give you time to convince them and demonstrate the value you bring.

Showing value in real data is the best way to justify price increases. If you are making them 2 or 5 or 10 times what they are spending on your services, or saving them that much, it's much easier to convince them to stay with you rather than going price shopping for lower cost options.

You can also create packages that adjust prices in different ways. Retainers are also a way to solidify repeatable income and then charge for overages. The key is how you present the costs of doing business with you.

I offer a base package that covers standard and repeatable monthly services that never change. Additionally, services like writing, web development, social media, and email posting are à la carte – the more they do, the more we make. With the on-demand stuff, we can slowly raise the price of each service, making increases feel like less-jarring jumps in pricing.

Closing Thought

Change is inevitable, but that does not make it easy or comfortable.

Rising costs are a fact of life, but they still cause consternation, as what was normal has now been disrupted. Consumers have become much more accustomed to the ebb and flow of pricing, while B2b businesses are much more attuned to pricing and cost of doing business.

As with most everything I pontificate about, relationships and communication matter. Don't wait for your customers to confront you. Communicate up front that prices will be rising on such and such a date, how much, and the why behind the changes.

It's always better to have an advocate (as opposed to an adversary) when it comes to the ever-changing world of doing business in the AI, IOT, and this Chaos-Commerce Economy.

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Comment below and share your thoughts, ideas, or questions about business-to-business sales and marketing today! Do you have a sales or marketing communications strategy that works for you? What tips or techniques can you share that work for you and your business?

To learn more about this and other topics on B2b Sales & Marketing, visit our podcast website at The Bacon Podcast.