‘Don’t start with what we can cut’: How accountants can support business owners amid price increases

Supplier increases

Levy said the label’s blank garment supplier has raised prices more than 10 times since Lonely Kids Club last lifted its own. Printing supplies have also risen, he said, including the Epson inks the business uses.

“We absorbed it for as long as we could because I know customers are already doing it tough,” Levy said. “Eventually, there wasn’t much room left without compromising something else.”

The label has staged the changes and given customers notice. Levy said it sent a customer email in September and another last week. The next price change, covering original designs, took effect yesterday (20 October).

“I can’t pretend everyone will be happy paying more, but I’d rather be upfront about it,” he said, adding that the increases have been kept as small as the business could manage.

The commitments he won’t cut

Levy identified three things he regards as non-negotiable: the team, the artists, and printing orders in Sydney. The label prints each design when it is ordered rather than producing large volumes of finished stock, and uses water-based inks.

He said that he takes the lowest salary on the team. “I could probably make the spreadsheet look nicer by cutting some of that, but I’d be running a different business,” Levy said.

In his view, fair artist payments and local printing are not optional extras. “They’re a big part of why the business exists and why people support us,” he said. He acknowledged there is always room to reduce waste or work more efficiently.

Levy was clear that he was not presenting the decision as a proven growth strategy. “We’re making the choice now,” he said, and the business does not yet know the full effect of the increases.

A question for advisers

Levy said the more useful lesson for accountants and advisers is how they open conversations with owners facing cost pressure. He argues that the starting point should not be where to cut.

“Don’t start with what can we cut,” he said. “Start with what the owner wants to keep, and then show them honestly what it costs.”

He suggested advisers begin by asking owners what they are actually trying to protect, and then separate genuine costs from commitments that define the business.

“Sometimes the answer really is that prices need to go up,” he said. “I’d much rather have that conversation than be told to become a cheaper version of everyone else.”

What he would want from an accountant

Asked what practical help would be most valuable, Levy said he would want an adviser to model a few realistic scenarios:

• Leaving prices unchanged.
• Increasing them modestly.
• Raising prices and then losing some sales.

He said a review of the label’s actual costs per order, wages, overheads, and cash flow would be more useful than being told its margins should be higher. “We don’t know the full effect of these increases yet,” he said.

Balancing margins and customer reaction

Levy described the balance between margins and customer reaction as the hardest part of the decision. “I know life is expensive enough already,” he said, explaining why the label has staged its increases and told customers in advance.

For accountants, Lonely Kids Clubs’ example illustrates a tension many small-business clients face: a cost-cutting default can conflict with the commitments that define a business, and the commercial consequences of choosing otherwise are uncertain. For businesses facing such hard choices, how their advisers liaise with and support them will be of paramount importance.