Two in three small businesses have raised their prices three times or more over the past five years, and a quarter plan to increase them again before the end of summer, according to new research.
Key Findings
The study of 500 business owners found that supplier costs and energy bills are the main factors driving price increases. Nearly half (49%) also considered staff wages before raising prices. Over the last 12 months, small business owners have seen their outgoings rise by nearly 17% on average, while monthly energy costs have surged by 23% over the past five years.
Businesses Struggle to Absorb Costs
According to the research commissioned by Smart Energy GB, 88% of business owners said raising prices is a last resort, and 86% have made behind-the-scenes changes to avoid passing costs to customers. Many have reduced non-essential spending (31%), absorbed costs by cutting profit margins (30%), or slashed their own salaries (28%). A quarter have also reduced energy consumption or renegotiated supplier deals.
Victoria Bacon, a director at Smart Energy GB, said: “We can see many small business owners are doing everything they can to manage rising running costs, while limiting the impact on their customers. A smart meter can help business owners track energy use and identify savings.”
Customer Concerns
While 34% believe customers have been understanding about price increases, 81% remain anxious about raising them further. Of these, 38% recognize customers are already struggling with the cost of living, and 36% worry customers may seek cheaper alternatives.
Brits’ Spending Limits
A separate survey of 2,000 adults revealed how much Brits are willing to pay for everyday items: a pint of beer (£5.45), a glass of wine (£6.23), a takeaway coffee (£3.99), and a sandwich from a café (£4.79). For meals, they’ll pay around £11 for a full English breakfast or fish and chips, but over £15 for a Sunday roast.
More than half (54%) have reduced discretionary spending, particularly on eating out (55%), new clothes (51%), and takeaways (49%). Despite this, 84% still believe it’s important to support local independent businesses, with 61% citing support for the local economy and 56% wanting to protect jobs.
