Price increases 2012 season !

[Steve L]

Our Site manager has just informed us of the increase for seasonal pitches at our site.
A whopping 15% (£200) increase on this year.
Now I was expecting some increase as the previous warden has in 2 years managed to P off and loose around 25 seasonal customers including a family group of 3 vans netting just shy of £5'000 in site fees on their own. Actually there is only us plus one other that have stayed the coarse since 2008.

But being realistic just how many folks can find £200 just like that?

In the current economic climate, people are just not spending unless they absolutely have to and leisure time is at a premium as folks are not able to afford to go long distances. The news today spoke of even more unemployment and business closeures.

Site owners realy do need to realise that everyone is reaching the point where increases in utility bills, fuel price hikes and now site fees, are putting a huge strain on how much spare cash they have for caravanning. For example our site already has steady income from 85 static pitches, so by comparison the 36 seasonal pitches are small change as such.

We were thinking of leaving our van on for another year, but now we are re-thinking our options.

 

[Martin24]

not just the price increase though is it?? If previous warden has managed to lose so many regular pitches surely you should be getting a decrease in rates across the board to encoursge people in for 2012 and review prices after another year?? Maybe I've got the wrong end of the stick but I would imagine plenty of people that would of considered a pitch will of been put of by a spreading reputation from talking to people who have left! Let us all know what you decide to do

 

[Steve L]

Your probably right there Martin.
I have met some of those who left our site and they have litterally moved to the next village, so that realy says that they like Herefordshire.
Over the last 2 years simply because the old wardens were "not available" after 4pm, dozens of passing camper vans and caravans have turned tail and gone elsewhere. yep you guessed it 4 miles up the road to Pembridge.

The new wardens are always out and about on hand to help visitors. They have had a few caravans stop over just by being there to help. I'm sure given time and an upward economy, they will succeed.

They even commented to me that contrary to what they had been told by the departing warden, unless they saw our car at the van, they wouldn't know we were there. Apparently they were told , we were trouble with a capital T. Quite the opposite is the truth as they have already discovered for themselves. I've helped Malc with finding the local info for usefull contacts for the usual things both visitors and he might want. For instance as Malc & maggie have a dog, I've pointed them in the direction of a local agricultural vetinary practice. Where the consultation fee is half that of Leominster town pet vets.

 

[Shirker]

While I can't speak for the site in question or comment on how it runs its business or treats its customers, as a small business owner I can have some sympathy with the site over the price increases. While salaries aren't increasing that much many other costs are and our costs have risen by nearly 13% this year, which means we are charging 13% more to our clients as well now just to stand still.
As an example of some of the costs which have risen very quickly:
Rent due to landlord up by 12% this year.
Council tax up from £14,585 to over £17,000 now. (While Councils are minimising or freezing rate rises for consumers they treat businesses as a piggy bank to be raided at will. We only payaround £16,000 rent anually for the office itself - council tax is now higher than rent!)
Gas and electric costs have gone up by just short of 9%
Insurance costs have gone up nearly 21% for vehicles, indemnity and public liability
and on and on and on
It's no surprise to hear a site raising it's fees as they may have no choice - fees below costs just means a slow death so you may as well raise them and try and get people in at the higher rates.

 

[RogerL]

Whilst I understand your business situation, prices can't rise simply just because costs have - consumers can't simply absorb all the increases so something has to give - in the case of caravan sites it's likely to be the occupation level over the year, ie fewer customers at the higher price.
Whatever your views on the cause or your ideas for the solution, we all know that we're in a recession - there's less money to go round so all businesses will have to work harder at giving customers value for money, that's if they want to stay in business.

 

[Surfer]

So a seasonal pitch is now going to cost about £1500 per annum which seems a bit high given the area. There are other sites better located that charge less. We would not be wanting to pay more £1300 per annum but we appreciate that finding a site at that price would be difficult.

 

[Dustydog]

Steve
15% increase is very high. Presumably the Site Owners have done their sums and concluded that the cost of Council Tax, Gas and Electricity is the main cause for the increase.
Call it a recession or depression the fact remains that most people have not had a decent rise , if any , for some years but as usual are expected to stump up the cash to make the fat cats richer.
Hard as it may be, I think the only way you can deal with this is to vote with your feet. Find another site and hopefuly save some money. The Site Owners will soon notice their turnover reducing which in turn will hopefully encourage them to reduce their charges.

 

[chrisbee1]

.
Call it a recession or depression the fact remains that most people have not had a decent rise , if any , for some years but as usual are expected to stump up the cash to make the fat cats richer.

My position exactly. I’ve not had a rise in the past 6 years, in fact as my once regular overtime has disappeared I’m actually earning less than I was 6 years ago. With inflation ever rising something has to give and I’m afraid it’s the amount of breaks I have per year. Of course with less time in the ‘van that in itself means that with the standing costs of servicing , insuring, storing etc a caravan is becoming an ever increasing luxury for me.

 

[Shirker]

Whilst I understand your business situation, prices can't rise simply just because costs have - consumers can't simply absorb all the increases so something has to give

From the business side there are only two options the way supplier costs are going at the moment, put prices up or shut up shop. You can't continue to run at a loss if your own costs have increased and I'd be surprised if there is a business out there whose like-for-like costs haven't increased over the last year. The business in alll likelihood probably doesn't want to put up prices but chances are it has no choice. In that matter it doesn't matter how tightly the consumer wallet squeaks - if prices don't go up it will just go under now, or if prices go up there is a chance of survival.

we all know that we're in a recession

The UK has not been in recession for quite a while now. We have extremely slow growth, barely above stagnant, but we aren't in recession.

 

[Surfer]

Whilst I understand your business situation, prices can't rise simply just because costs have - consumers can't simply absorb all the increases so something has to give

From the business side there are only two options the way supplier costs are going at the moment, put prices up or shut up shop. You can't continue to run at a loss if your own costs have increased and I'd be surprised if there is a business out there whose like-for-like costs haven't increased over the last year. The business in alll likelihood probably doesn't want to put up prices but chances are it has no choice. In that matter it doesn't matter how tightly the consumer wallet squeaks - if prices don't go up it will just go under now, or if prices go up there is a chance of survival.

we all know that we're in a recession

The UK has not been in recession for quite a while now. We have extremely slow growth, barely above stagnant, but we aren't in recession.

If you keep on increasing prices there will be consumer resistance and you will end up shutting shop anyway. In economics, a recession is a business cycle contraction, a general slowdown in economic activity so not sure how you can say that Britain is not in a recession.

 

[RogerL]

Whilst I understand your business situation, prices can't rise simply just because costs have - consumers can't simply absorb all the increases so something has to give

From the business side there are only two options the way supplier costs are going at the moment, put prices up or shut up shop. You can't continue to run at a loss if your own costs have increased and I'd be surprised if there is a business out there whose like-for-like costs haven't increased over the last year. The business in alll likelihood probably doesn't want to put up prices but chances are it has no choice. In that matter it doesn't matter how tightly the consumer wallet squeaks - if prices don't go up it will just go under now, or if prices go up there is a chance of survival.

we all know that we're in a recession

The UK has not been in recession for quite a while now. We have extremely slow growth, barely above stagnant, but we aren't in recession.

Oh but it does matter how tightly the customers' wallet squeaks - they choose where to spend their limited cash.
I know it's technically not called a recession but when the economy is at the bottom of a trough, it sure feels like it.
Successful businesses take their customers' disposable income into account and tailor their products/services to suit - ignore it at your peril.

 

[Shirker]

so not sure how you can say that Britain is not in a recession.

Very simply, a recession is two quarters of negative growth, while we haven't had even one quarter of nagative growth recently, therefore we are not in recession. We may not be growing either and the economy is far from healthy, but we are not in recession and haven't been for a while, which is quite clear.
As for not putting prices up because of consumer resistance, all that is perfectly true, but sometimes in harder times in a business that is not the determining factor for prices. While I can't say for sure about the site in question, as a general rule in business you don't put your prices up for the fun of it unless you are running at nigh-on 100% capacity so can push the market up a little.
The statement above of "If you keep on increasing prices there will be consumer resistance and you will end up shutting shop anyway" is true and is the better option - the choice often is put prices up or shut, there is no 3rd route. if you shut up shop now then that's it, while if you push prices up there is a chance you can squeak through and come out the other side. You may not and may still go bust, but there is a chance, which is a lot more than you have if prices stay down while costs to businesses are inexorably rising and rising fast. The only other infulencing factor is to maximise sales, so in their case pitch rentals, but there is a ceiling to that as well.
I'm not arguing that this is exactly what is going on with the site, but that consumers can't really stamp their feet about it as the harsh reality of business at the moment is that costs are going up fast and that has to be passed on. A small business can't absorb it, pay it or run at a loss, therefore it has to be passed on to the consumer. The gamble may not work and you go under anyway, but you have to try.

 

[RogerL]

We know the customer isn't king at the moment - but simply putting up prices to cover increased costs will ensure that some customers can't afford them and go elsewhere.
You seem to think that the customer doesn't matter and/or can't vote with their feet.
Customers are no more able to absorb increased cost than any business.

 

[DeliDave_]

I work for myself (gas servicing) and havent put my prices up for 3 years,I know some customers won't pay more and I'll lose them forever and also any friends that they might have recomended me to.They'll just leave like people on Steves site will,they should give a loyalty discount so new customers that they wouldnt have had anyway will pay a bigger rise than existing clients,have I phrased that very well.

 

[Shirker]

We know the customer isn't king at the moment - but simply putting up prices to cover increased costs will ensure that some customers can't afford them and go elsewhere.
You seem to think that the customer doesn't matter and/or can't vote with their feet.
Customers are no more able to absorb increased cost than any business.

Not at all Roger, not saying that at all - it does matter. Just saying that businesses don't push costs up for no reason and they more than all will be aware of the risks of doing so. My point was that businesses don't have a lot of choice. It's fine if you are a one or two man company as most costs are variable then, but as soon as you grow a little, fixed costs shoot up so it doesn't matter if people are spending moey there or not - you still have to pay the money out and there could be no option other than putting prices up. The customers won't want to do it and the site may not want to do it, but to stay in business they may have to.

We have about £34,000 in fixed costs a month, excluding all variable costs such as fuel which is about £3,000 a month - doesn't matter if we don't do a stroke of work, we still have to pay those fixed costs out. If fixed costs go up then our prices have to go up or we go bust. Caravan sites will have huge fixed and variable costs and they have to be met. Customers may not like it and go elsewhere which is perfectly understandable, but there will be logic and thinking behind the decision other than a desire to gouge the customer. If the customer can't or won't pay then the site may still not be able to keep costs the same if they've seen the same price rises we have - its a lose lose situation for them, but the quickest death can be keeping prices down.

(The is the other scenario that they are at the top of their game and care at 100% capacity so put prices up and demand will mean some people don't pay but others will, which is the Apple way, but the site didn't sound like it was in that position from the initial description).

Loyalty discounts are not a solution - doesn't matter if someone has been a customer for 10 years if you lose money providing the service to them - you are genuinely better off staying at home and not selling to them.

 

[chrisbee1]

The assumption being made is that prices have to rise to keep a company afloat. Could it not be the case that they just want to maintain their 30% profit margin?

 

[Dustydog]

In the current economic climate turnover is key. Pushing up Steve's rent by 15% assumes he's going to take the hit on the chin. When he refuses that turnover is gone forever so there is no profit margin at all. We're all having to tighten our belts.
Low turnover , high profit today is not as good as high turnover low profit imo. Better to to stay afloat and fight another day than go bust today. Shame the Utilities don't see it that way

 

[SteveW77]

As someone who ran my own business for over 25 years, I think that the last contribution ( Chrisbee) to this debate show a complete lack of understanding of how a business operates.
Every business has overheads, these keep going up the same as everybody elses costs, wages rent, council tax, fuel bills insurance, pension contributions, sick pay, holiday pay, all these costs have to be paid. There is only one place that the money can come from and that is the customer.a 30% gross profit margin is only just covering the costs and does not leave anything for investment in the business, which means it will eventually decline and go bust.
When will people accept that you can only have what you pay for, you cannot keep living in a make believe world, where somebody ( anybody ) else picks up the extra costs.

Steve W

 

[Shirker]

Low turnover , high profit today is not as good as high turnover low profit imo. Better to to stay afloat and fight another day than go bust today. Shame the Utilities don't see it that way

No point in high turnover if your costs are even higher. Dunno who said it originally, but when I first quit work to try setting a small business up I was told "turnover is for vanity, profit is for sanity" - wise words for every business owner of any trade.
Apologies for the thread hijack - I just thought it mildly interesting to try and see the possible business perspective.

 

[RogerL]

No point in high turnover if your costs are even higher.

Yes there is - turnover contributes to a business's fixed costs as long as the selling price is above the marginal costs.
As turnover goes down, the fixed costs have to be spread over fewer customers forcing the prices up even higher reducing turnover even more - a viscious spiral - and the converse is true.

 

[chrisbee1]

Every business has overheads, these keep going up the same as everybody elses costs, wages rent, council tax, fuel bills insurance, pension contributions, sick pay, holiday pay, all these costs have to be paid. There is only one place that the money can come from and that is the customer.a 30% gross profit margin is only just covering the costs and does not leave anything for investment in the business, which means it will eventually decline and go bust.
When will people accept that you can only have what you pay for, you cannot keep living in a make believe world, where somebody ( anybody ) else picks up the extra costs.

Steve W

Yes Steve, I know that. The point I was trying to get across is that I think some businesses tend to increase their prices to maintain their NET profit so the consumer takes the hit, not the company.
,” you cannot keep living in a make believe world, where somebody ( anybody ) else picks up the extra costs”.
Isn’t this exactly what the companies are doing?

 

[Dustydog]

[No point in high turnover if your costs are even higher. Dunno who said it originally, but when I first quit work to try setting a small business up I was told "turnover is for vanity, profit is for sanity" - wise words for every business owner of any trade.
Apologies for the thread hijack - I just thought it mildly interesting to try and see the possible business perspective.

Whoever said it must have gone out of business pretty quickly. Turnover or sales is a fundemental.
Without it there can be no profit.

 

[Surfer]

so not sure how you can say that Britain is not in a recession.

Very simply, a recession is two quarters of negative growth, while we haven't had even one quarter of nagative growth recently, therefore we are not in recession. We may not be growing either and the economy is far from healthy, but we are not in recession and haven't been for a while, which is quite clear.

Not sure which School of economics you attended as a recession is a slow down in economic growth and at the moment we are almost at a standstill with inflation at a high level in comparison to growth!

 

[Parksy]

Although costs are rising for most businesses it seems to me that the laws of supply and demand may be the deciding factor where this caravan site is concerned.
Because of the ever increasing cost of fuel and the fairly recent growth in caravan ownership regular touring has become significantly more expensive.
Increasing numbers of touring caravan owners have decided to opt for seasonal pitches and although there may have been a short term decrease in seasonals on Steve's site because of alleged past problems with the warden the overall demand for seasonal pitches has risen.
Steve mentioned that the site also has static pitches and in recent times these have been similar to a licence to print money for site owners so perhaps the static prices are more erm, static this year and the tourer seasonals are being made to pay more instead.

 

[Martin24]

As usual all has spread out into a much more general forum discussion. So just one more example is our local butcher who although not selling at a loss has had to reduce his profit margins, especially on lamb because he knows his customers on the whole would not be able to afford the product at the new prices and he would rather reduce his margin than not be able to provide the service to his customers! He has also diversified increasingly to stay afloat! I think I can safely say he's trying to make a reasonable living without being greedy, thus keeping his business afloat!