For many business owners, the last few years have brought a steady drumbeat of rising costs. Fuel, rent, wages, insurance, energy, software, freight, property taxes — it all seems to be going up at once. At the same time, some customers are more pricesensitive than ever, which makes the question of “what do we do about it?” both stressful and deeply personal.
There’s no single right answer. But there are three common approaches business owners tend to consider — and each one comes with tradeoffs worth thinking through carefully.
- Do nothing and hope It Passes
It’s completely understandable to want to wait things out. Many owners tell themselves that the cost increases are temporary, or that passing them on might upset good clients or slow sales. In the short term, doing nothing can feel like the least risky option.
The problem with this approach is that it can hide the real impact on profitability. If your costs have crept up by 5–10% and your prices haven’t moved, you may already be working harder for less — or worse, quietly losing money. Over time, this can erode cash flow, causing more problems the longer that cost pressures are present.
Doing nothing isn’t always wrong, but it does require a clear vision and strategy. If you choose to wait, make sure you’re actively monitoring margins and cash flow, rather than hoping things will improve on their own, while also planning ahead for future price adjustments and appropriate communication with customers.
- Pass on costs — thoughtfully and transparently
Passing on increased costs is often the most commercially sound option, but many business owners feel real pressure in competitive markets, and amongst clients who themselves may be experiencing cost pressures. Many business owners imagine price rises as a binary choice: raise prices sharply or not at all. In reality, there are more nuanced ways to approach it.
Some businesses opt for smaller, staged increases rather than one big jump. For example, moving to billing processes that pass on an increase in smaller staged payments, rather than a single lump sum. Others link price changes to specific cost drivers, such as wages or supplier increases, and explain this openly to clients. Framing the change around maintaining service quality, reliability or staff retention can also help clients understand the “why”. It may also be possible to instill a temporary charge that can be removed if costs recover.
Most clients expect some level of price movement — especially when communication is clear and respectful. The key is to be deliberate rather than reactive, and to avoid apologising for running a sustainable business.
- Absorb the Costs — With Eyes Wide Open
Absorbing increased costs yourself can sometimes make sense in the short term, particularly in highly competitive markets or during temporary downturns. But doing this as a default strategy is risky.
Over time, consistently taking on cost increases diminishes profitability and increases owner stress. It can also create a false sense of stability — cash is coming in, but value isn’t being created. There’s a point where “getting money in the door at any cost” simply isn’t worth it, particularly if it leads to burnout or an unviable business model.
If you decide to absorb some costs, treat it as a conscious, timebound decision — not a habit. If the competitive pressure is high in your industry, the only way you can really absorb these costs sustainably may be to find equivalent cost cutting across your business expenses to compensate.
Choosing a Sustainable Path Forward
Ultimately, rising costs force business owners to confront tough tradeoffs. The goal isn’t to make a perfect decision, but a commercially honest one. Understanding your numbers, being clear about your margins and communicating with intention puts you in control — even in uncertain conditions.
A sustainable business isn’t one that avoids discomfort. It’s one that makes pragmatic decisions early, while options still exist.
If you need support reviewing your cost structure, reach out to the team here at Saward Dawson.
