If you listen to the news, price inflation is the new reality. In the construction industry, we’ve experienced an average increase of 15.5% over the past 12 months. Anecdotal evidence would suggest this isn’t the end of these increases as demand is continuing to outstrip supply and supply often can’t be increased in a short period of time.
On an individual business level, this presents a unique set of challenges. Where, when, and how do you use price to moderate demand? How do these decisions interact with the business’ long term growth strategies, and what's the impact on your future relationship with your customers?
At Envirocon, our approach has been to apply the bare minimum of price increases - almost half of the industry average. While this sometimes results in longer lead times, this is easily mitigated by customers ordering well in advance of requiring the blocks. Few customers are going to build a large concrete structure within days of first thinking about it.
At the core of this approach is a long term view of our relationships with our customers, when inflation inevitably calms down we want to be the business that our customers look at and say they weren't taken advantage of.
That said, we acknowledge that some customers have urgent requirements - they actually need blocks within days. For these customers, we’ve introduced a priority surcharge. This modest surcharge is designed to cover the cost of additional temporary production.
We do this because there is a clear market demand for this service - customers are asking for urgency, and there is a clear way to avoid the additional charge - order early or wait the lead time.
We believe the priority surcharge is the fairest way of catering to the needs of all our customers, and without it, we wouldn’t be able to reduce price rises to half the industry average - and that situation would adversely affect all our customers.
