By Terri Mercieca of Happy Endings

I’m on a mission to improve people’s understanding of ice cream and what’s involved in the cost of making it. We recently raised the prices of our ice creams and here is how it went down. 

–Terri Merceica of Happy Endings

One of the hardest things for me as a business owner is pricing. At times I’ve felt a bit guilty when sharing the price list, I worry about what the reaction will be.

I ask myself, will they see what I see in this product or will they think it’s ridiculous?

Just after Covid, I had to make the decision to raise our product prices across the board. This was due to the rising cost of the ingredients we use (butter, dairy, chocolate etc), staff costs and business costs.

There were other factors too: Although we consider ourselves a hospitality business, as we employ chefs and make artisan food products, we are technically in the wholesale sector and only supply hospitality businesses. This meant that we found ourselves ineligible for much of the Government financial support like the VAT break and business rates which other businesses received. But at the same time we were absorbing the continual rising costs of a pandemic and Brexit.

It didn’t feel right to put our prices up in the middle of a pandemic as we wanted to give our customers the best chance of survival, too. But late in 2021, it was obvious that we needed to increase our prices or not have a business ourselves. There was no real alternative.

I knew we had to get it right both for our business and our customers  so we wouldn’t have to do it again for a further year or more. Everyone is experiencing the pain of rising living costs without much or any increase in wages, so it was important to be super transparent about the process and the reasoning behind the price increase to our customer base.

I also found it reassuring to know that at the time, Ikea raised their prices by 50%, so I knew now was the time. It helped me to internally justify it to myself that we could do it too.

Clear and kind communication is everything. This is my motto for my business when talking about difficult things. The most important thing to me was that I had double-checked the facts and figures and was able to communicate this without coming across badly and losing our beloved clients.

The things that helped a lot were getting clear on what we were about, what problems we were solving for our restaurant partners, our grocers and what we were delivering. Knowing we were delivering consistently high-quality desserts, that our partners trust us, that we have a good reputation and that we would be able to gather and share the information people needed. It’s important to me that our customers feel cared for.

In the end, we had a 30% raise in prices, that was what was necessary for us to continue and to my surprise, we were met with a very overwhelming positive response to the price increase. In our email notifying  the price increase, we made sure we explained what we were doing for our partners, what our non-negotiables were as a business and why this impacted the costs, and we were transparent about our running costs.

We even got praise for how we delivered the message. Out of all our clients, we had one loss, one complaint and the rest were positive, wanting to support us.

For full disclosure, the process went like this.

• We took a long hard look into the costs, but with a view for the future and to include any rent reviews, utility price spikes and potential price increases on goods that haven’t gone up yet.

• Made a spreadsheet, splitting out every cost into the business, grouped into ingredients cost, cost of goods (delivery, packaging, etc),  then wages, plus overheads

• We worked out  the current price, gross profit margin then net profit margin and percentages.

• We re-calculated our breakeven point. After seeing the costs clearly and almost having a heart attack, we built out the spreadsheet to include the potential price increase and then how the GP and NP would look.

• We then had to play around with figures calculating possible price increases and their percentages.. This was done so that we could balance a figure that would make the company enough money to grow whilst not making it too painful for our customers.

• We wrote the email, laying out the how, whats, and whys of the price increase. We reminded our customers of who we were and what we feel we do and stand for.

We made a new PDF and we tried to give as much notice as possible but without it being too late for us.

And that’s how we did it!

The message I want to share is that if you are clear about what you do, back yourself with facts, communicate kindly, do your best to give enough warning and have the trust of your customers, they will understand and support you. 

It wasn’t a perfect delivery and there were a few mistakes with how it went – but thankfully no one told us to fuck off.