Raise Your Prices or Don't. Just Decide.

Most owners who are "thinking about" a price rise have already made their decision. They're just not willing to admit the decision was no.

I want to introduce you to a client, I'll call him Grant, who runs a café. Grant's coffee, dairy and wage costs have gone up around nine percent over the last year. His prices have gone up by exactly nothing. He's walked around this decision for eight months, weighing it, chewing on it, waiting for a better moment to raise a flat white by fifty cents. There hasn't been a better moment. There isn't going to be one. And every week he waits, his margin gets a little thinner and his business gets a little more fragile, and he tells himself he's "being careful," when what he's actually being is scared.

Grant isn't alone. Retail NZ put out its own trading numbers in July, and they told a story worth sitting with if you run a small business here. Apparel sales were down 4.2 percent year on year, the fourth straight month of decline. Hospitality spend was down 1.4 percent. Even grocery spending, the one category still growing, was growing slower than inflation, which means the growth is an illusion once you adjust for what a dollar is actually worth. On the other side of that same ledger, NZIER's quarterly business survey found 41 percent had raised prices in the June quarter, the highest share since September 2023, and 54 percent said they intended to raise them again by September.

Read those two data sets together and you get the real picture. Demand is soft. Costs are still climbing. And a large chunk of business owners are responding by raising prices anyway, because the alternative, absorbing rising costs against falling revenue, isn't a strategy. It's a slow bleed with a polite name.

Here's what I actually think, and some of you won't like it. Sitting on a price rise because you're worried about losing customers who are already spending less is the worst version of this decision available to you. You're not protecting your customer base. You're guaranteeing your own margin disappears while your competitors, the 41 percent who already moved, get comfortable operating at a price the market has already told them it will bear. You don't get credit for being the business that "held the line" on pricing during a downturn. You just get thinner.

I'm not telling you to raise prices blind. That's a different kind of stupid. Know your margin by product or service before you touch anything. Know which customers are price sensitive and which ones were never choosing you on price in the first place. Know what your competitors are actually charging, not what you assume they're charging. That homework takes a week, maybe two. Grant's homework took him eight months to not do, and the answer sat there waiting for him the entire time.

What actually happened with Grant is instructive. Once he ran the numbers properly, the decision took him about twenty minutes. His flat white went up sixty cents. He lost four regulars in the following month, by his own count, and picked up enough margin on everyone else that the four he lost were, financially, a rounding error. He told me afterwards the worst part wasn't the price rise. It was realising he'd spent eight months being anxious about a decision that, once made, barely registered.

That's the pattern I see constantly with pricing, and it's not really about pricing. It's about the gap between how big a decision feels before you make it and how small it turns out to be once it's behind you. Owners inflate the size of a decision to justify not making it. The inflation is the whole problem, not the decision itself.

So if you're sitting on a price rise right now, waiting for conditions to improve before you touch it, I'd ask you to be honest about what you're actually waiting for. Conditions aren't going to hand you permission. Retail NZ's numbers say they're getting worse, not better. The businesses still standing in twelve months won't be the ones who waited for a comfortable moment. They'll be the ones who ran the numbers, made the call, and got back to running the business.