Dealing With Rising Production Costs

Giovanni: There are No two ways about it. We have To raise prices.

Melanie: We can’t. We already raised prices earlier this year. Doing it again risks Alienating our customers.

Giovanni: What else can we do? Our Production costs have risen nearly 15 percent. We’ve tried Absorbing them and Offsetting them, but nothing has worked. Our Profit margin continues To shrink and we don’t have any other choice.

Melanie: What about lowering the quality of our Raw materials? We could use a cheaper Supplier.

Giovanni: That’s A sure way to lose customers. If we start Cutting corners on quality, our customers will Leave in droves.

Melanie: What if we Discontinue manufacturing some of the less popular items? That should save us some money.

Giovanni: Not enough. We either raise prices or stop production Altogether.

Melanie: There is one other option.

Giovanni: What?

Melanie: We could reduce our Workforce.

Giovanni: You mean fire people? That’s Off the table!

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