New Coronavirus Job Support Scheme

Yesterday, the Chancellor announced significant changes to the Job Support Scheme (JSS), which will have a positive effect on many businesses affected by the pandemic. 

Old Scheme

As a reminder, the old scheme required employees to work a minimum of a third of their normal working hours, which the employer would pay as normal and then any hours not worked would be subsidised by the government; the employer and the employee in equal parts (one third each).  The employer would be responsible for paying all pension and NI contributions associated with all paid hours.

So, as a minimum, if the employee worked 33%, then there would be a 67% short fall in normal wages.  Of this 67%, the shortfall would have been shared:  the government 22%; the employer 22% and the employee would have been unpaid by 23%.  Meaning that the employee would have received a minimum of 77% of normal pay and that you as an employer would have been responsible for paying 55% of normal hours, plus the NI and pension contributions for the 77% of hours.

 New Scheme

The new scheme requires employees to work a minimum of 20% of their normal working hours, which the employer will pay as normal.  For the remaining 80% of unworked hours, the employer will be obliged to contribute 5% (4% of total normal hours); the government 62% (49.6% of total normal hours) and the employee will be unpaid for 33% (26.3% of total normal hours).  This means that the employee receives a minimum of 73.6% of normal pay under the scheme.  

The government contribution is capped at £1,541.75 (gross) per month.

The scheme is available to all regions, not just those in higher COVID alert areas.  For those businesses instructed to close by law, they are still able to claim 67% of wages without the requirement for employer contribution.

All other criteria associated with the original scheme remains the same, including that all claims will be paid in arrears, so it’s worth considering this in terms of cash flow.

Cost Illustrations

We have put together some illustrations of what the cost implications would be to you as an employer when using the scheme, and without.  So that you can make an informed decision that is best for your business.

As a reminder, the scheme supports short-time working. 

Costs when NOT using the Job Support Scheme

Costs 100% hours worked   50% hours worked 20% hours worked
Gross Pay   £2000.00 £1000.00 £400.00
Employer Pension Contribution   £60.00 £30.00 £12.00
Employer NI Contribution   £174.98 £36.98 £0.00
Total Cost   £2234.98 £1066.98 £412.00

Costs when using the Job Support Scheme – based on 20% of hours worked

Gross Pay for 20% of hours worked   £400.00
Employer Pension Contribution for 20% of hours worked   £12.00
Employer NI Contribution for 20% of hours worked   £0.00
TOTAL NORMAL COST FOR 20% OF HOURS WORKED   £412.00
The remaining unworked 80% of normal hours is split between the Employer (4%); JSS (49.6%) and Employee (26.3%)
Employer Contribution – 4%   £80.00
Additional Employer NI (based on 49.6% JSS & 4% Employer Contribution)   £102.12
Additional Employer Pension Contribution (based on 49.6% JSS & 4% Employer Contribution)   £32.16
TOTAL ADDITIONAL COSTS   £214.28
TOTAL COST TO EMPLOYER   £626.28

From this, you can see that it costs the employer £214.28 (52%) more to use the scheme in this scenario than not to. 

Costs when using the Job Support Scheme – based on 50% of hours worked

Gross Pay for 50% of hours worked   £1000.00
Employer Pension Contribution for 50% of hours worked   £30.00
Employer NI Contribution for 50% of hours worked   £36.98
TOTAL NORMAL COST FOR 50% OF HOURS WORKED   £1066.98
The remaining unworked 50% of normal hours is split between the Employer (2.5%); JSS (31%) and Employee (16.5%)
Employer Contribution – 2.5%   £50.00
Additional Employer NI (based on 31% JSS & 2.5% Employer Contribution)   £101.71
Additional Employer Pension Contribution (based on 31% JSS & 2.5% Employer Contribution)   £22.11
TOTAL ADDITIONAL COSTS   £173.82
TOTAL COST TO EMPLOYER   £1240.80

From this, you can see that it costs the employer £173.82 (16.29%) more to use the scheme in this scenario than not to.  But the more hours that are worked, the more cost effective it is for the employer.

In both scenarios the costs are higher than if you simply placed the employee on short-time working and paid them only for the hours worked.  But it is a significantly enhanced package than that offered previously.

*These figures are an illustration based on the information we have available of the scheme at this present time.  They may be subject to change as more information becomes available.

How to stay mentally healthy at work

We all have the tendency to work-work-work and forget about ourselves. That’s okay on occasion, but not on the long run, so it’s good to keep your mental health in check to avoid running into health problems. Here are 6 tips to stay mentally healthy at work.

1. Fresh air and physical exercise

Fresh air and physical exercise can have a huge impact on mental health and has been proven to prevent and manage depression. So instead of sitting at your desk (at home or in the office) for your lunch break, make sure you get up and get outside for a quick walk to refresh both your body and mind. If you can do this with a friend or your partner, then it will help you relax. If the weather is too bad to go outside, get away from your work area and relax. Anything that takes your mind of work is good.

Did you know?

Poor mental health increases the risk of burnout. According to 2019 data, 5 out of 10 people has experienced a burnout, in most cases caused by the lack of control and power, boredom or chaos, a heavy workload, or a combination of these causes. If you’re mentally healthy you’ll be able to cope better with these workplace problems.

2. Plan and organise

Being disorganised can add to stress levels, reduce your productivity, and cause you to fall behind with work projects – which can make your workload seem even more overwhelming. Take a few minutes at the beginning of your workday to plan out your work for the day. Use this time to ensure long-term projects are scheduled properly so that you have enough time to do everything effectively. If you manage others, make sure their workload is organised properly too, and that any deadlines and commitments are clearly defined.

Don’t beat yourself up if you fall short of the target

3. Eat healthy and stay hydrated

Eat at least four healthy lunches in a working week and keep a water bottle at your desk to drink at least a litre of water a day. Don’t beat yourself up if you fall short of the target.

4. Keep things in perspective

It’s easy to make mountains out of mole hills at work. This is particularly true when either our job is very important to us and/or when we have been in the same work role for a number of years. In both cases it’s easy to blow things out of proportion, when we should just be letting some things go.

Remember where work ends and your home life begins

5. Allocate time for the things you enjoy

Whether it’s reading a book, practising yoga or joining a night class to develop a new skill you’ve always wanted to learn, finding activities that you enjoy and that enable you to relax outside of work is incredibly important. It’s all about scheduling in some ‘me time’, just as you would any other appointment or commitment.

6. Balance your work and personal life

Work the hours required and create mental and physical boundaries to reduce work/home spill-over stress. In other words, remember where work ends, and your home life begins. If you work from home, keep work-related items in a room where you can shut the door at the end of the day, so closing it away and keeping it separate from your home environment.

The latest on Coronavirus COVID-19: New 3-Tier Alert System & Extension to Job Support Scheme

COVID-19 3 TIER ALERT SYSTEM

Yesterday, the Prime Minister announced the introduction of a 3-tier alert system in England for local restrictions, in a bid to avoid another national lockdown.

The 3 tiers are as follows:

LEVEL   RESTRICTIONS
MEDIUM     Rule of 6 indoors & outdoors. Pubs & restaurants to close at 10pm.  
HIGH     No household mixing indoors. Rule of 6 outdoors – including private gardens.  
VERY HIGH         No household mixing indoors or outdoors. Pubs/bars not able to operate as a restaurant will be forced to close. Avoid travelling in and out of the area – including overnight stays elsewhere. Each local authority will decide whether to close other businesses like gyms; casinos; leisure centres and other businesses.

The majority of England is at the ‘medium’ alert level at the moment.  Those districts that were already operating under local restrictions, were automatically placed into the ‘high’ alert category (plus a couple of others identified as a high risk during the process).  The only borough to be considered ‘very high’ at the moment is Liverpool.  However, it is likely that if the numbers don’t improve that others will follow suit.

Boris Johnson stressed that there was a commitment to keep all retail outlets, schools and universities open.

For those businesses forced to close as a result of being in the ‘very high’ alert category, the government has made the following financial support available:

·         Coronavirus Job Support Scheme (until 31st October)

·         Job Support Scheme (after 1st November), offering 67% of wages to those unable to work.

·         Local Restrictions Support Grant scheme increased to up to £3,000 per month and can claim after 2 weeks rather than 3.

·         £1 billion investment in local track and trace and enforcement.

EXTENSION TO JOB SUPPORT SCHEME

On Friday 9th October, Chancellor Rishi Sunak announced an extension to the Job Support Scheme which would support businesses that were forced to close by law as a result of further local restrictions.

The scheme has been extended to cover 67% of wage costs up to a maximum of £2,100 (gross) per month for each employee that is unable to work as a result of local restrictions.  There is no requirement for the employer to contribute to wages, but they will be responsible for paying the NI and pension contributions.  Each employee must be unable to work for a minimum of 7 days.   

As soon as the area is released from local ‘high alert’ restrictions and can technically open again, then this additional support will be withdrawn.  Businesses will then be able to use the original Job Support Scheme for help.

As per the Job Support Scheme, this additional support will be available from 1st November for a period of 6 months.

If you need any assistance with the JSS, please contact Lissa.

Struggling to pay your self-assessment for 2019-20

As announced by the Chancellor last week, Self Assessment customers can now apply online to spread the cost of their tax bill into monthly payments without the need to call HMRC.

The online self-serve ‘Time to Pay’ service, has been increased to £30,000 for Self Assessment customers, to help ease any potential financial burden they may be experiencing due to the coronavirus pandemic.

Once you’ve completed your tax return for the 2019-20 tax year, you can use the online self-serve ‘Time to Pay’ service through GOV.UK to set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.

If you wish to set up your own self-serve ‘Time to Pay’, you must meet the following requirements:

  • no outstanding tax returns
  • no other tax debts
  • no other HMRC payments set up
  • your Self Assessment tax bill is between £32 and £30,000
  • it is no more than 60 days since the tax was due for payment. 

If you do not meet these requirements, you might still qualify for Time to Pay, but you will need to call HMRC to set this up.

If you set up a ‘Time to Pay’ arrangement, you will have to pay interest on the tax paid late. Interest will be applied to any outstanding balance from 1 February 2021.

If you need any further assistance on any of the above issues, please contact Bryan.

As it stands, the Coronavirus Job Retention Scheme or ‘furlough’ comes to an end on 31st October 2020. So, with just over 5 weeks to go, you may be thinking about your options going forward.

Reminder of CJRS claim for October

From 1st October, the employee will still receive 80% of salary, up to a maximum of £2,500 (gross) per month, however, the government contribution will be a maximum of 60%. 

This means that the maximum amount an employer can claim via the CJRS is 60% of salary or a maximum of £1,875 (gross) per month.

Employers are expected to pay the additional 20% and all NI and pension contributions for hours worked and not worked (up to 80% or a maximum of £2,500 gross per month).

All claims must be submitted by 30th November 2020. This includes all adjustments to previous claims.

Job Retention Bonus

Businesses will receive a one-off payment of £1,000 for every previously furloughed employee that is still employed as of 31st January 2021. This bonus will be taxable.

To be able to claim, employees must have earnt at least £520 per month, from November to January, or £1,560 average earnings across 3 months. For those with average earnings, the employee must have had some earnings in each of the 3 months – November, December and January. These earnings must have been paid and reported to HMRC via RTI.

All previously furloughed workers are eligible, so if they met the criteria previously, you will be able to claim. This includes: fixed term contracts; office holders; company directors; agency workers and umbrella companies.

Those employees who returned from statutory parental leave or being mobilised as a military reservist after 10th June 2020 and were eligible to be placed on furlough and claimed for via the CJRS, will also qualify for the bonus, so long as they meet all the other criteria.

You cannot claim for anyone who is within their notice period.

Claims will be submitted via GOV.UK from February 2021. We believe this will be an online portal, much like the CJRS one. The government have promised to release more information on this by 30th September 2020.

Kickstart Scheme

You could choose to take advantage of the governments Kickstart Scheme. This is where the government contributes 25 hours per week in exchange for you offering anyone between the age of 16 and 24, who is out-of-work and claiming Universal Credit, a six-month work placement.

The Jobcentre will identify people at risk of long-term unemployment to refer to the scheme, and Jobcentre work coaches will support candidates before and after their placement.

The government aims to have the first placements on offer from November. To register your interest, you can visit http://www.gov.uk/kickstart. Employers interested in offering fewer than 30 Kickstart roles should apply through a representative organisation. This includes Local Authorities, Chamber of Commerce and Trade Bodies.

The scheme will run until at least December 2021 and covers the whole of the UK.

Lay-off or Short-time Working

A temporary reduction in working hours and wages, may be a consideration after furlough has ended. You may not be in the financial position to bring people back full time, or the business just isn’t there yet, so you don’t need them to work.

If your contracts of employment contain these clauses then you can impose either lay-off or short-time working, without agreement from your employees. 

With lay-off, employees can be laid off for up to 4 consecutive weeks (or 6 weeks, of which no more than 3 are consecutive) in a 13-week continuous period and if they have over 1 months’ service they would qualify for statutory guaranteed lay-off pay of 5 days normal pay (pro rata for part-time employees). One thing to be mindful of, is that anyone with over 2 years’ service might be able to claim for a redundancy payment if they have been laid off for more than this.

Short-time working refers to a reduction in working hours which equates to less than half of their normal working hours and pay.

If you do not have these clauses within your contract, then to impose it you would be at risk of a claim for constructive dismissal and/or unlawful deductions from wages. 

However, what you could consider is discussing and agreeing a period of lay-off or short-time working with your employees. Normally, if the situation is explained clearly enough, they know that it is temporary and as an alternative to redundancies, then they are agreeable. In this scenario, it would be advisable to get signed consent to such an agreement and place it on their personal file.

Restructure

It may be that as a result of a decrease in business, or the change in the way you do business, that you need to consider restructuring your organisation. It may be that since employees have been on furlough you have found new, more efficient ways of doing things and so the role has changed or isn’t there anymore.

It’s so important to look at what job roles you have, compared to what you need going forward and make the necessary changes.

Redundancy

As a result, you may need to consider making some redundancies.

In this scenario it is important to follow a fair and proper procedure. Despite the pandemic, there are no allowances within legislation which allow you to cut corners and all employment law should be adhered to as normal.

If you are making less than 20 roles redundant, then there is no set consultation period, it simply must be ‘reasonable’ to allow for meaningful consultation. If you are making 1 role redundant, but more than 1 person is in that role, then you would need to consider pooling these employees together in the process.

It is a complex area and can be expensive to get wrong. So, it is recommended that you get some expert advice if you are thinking of making any redundancies.

The New ‘Normal’

As it looks like the current restrictions are going to last at least another 6 months, you are probably considering how best to do business during this time and what the ‘new normal’ will look like. 

Returning to Business Premises:

You will probably already have this in place, but if you are bringing people back to the business premises, you will need to make sure that you are ‘COVID secure’. Failure to do so could result in fines of up to £10,000 and businesses being closed.

It is important to complete a risk assessment to ensure that you are doing all that you can to keep your employees safe – social distancing; hand wash areas; protection screens; one-way systems etc… There are a number of sector specific guideline documents on the government website to help you. Your H&S advisor will also be able to help.

Working from Home:

With the announcement yesterday that those that can work from home, should work from home, it looks like home working is here to stay – at least for the next 6 months.

Many businesses have found that working from home has been a welcomed shift in culture and are embracing it. Businesses are reporting much higher productivity rates; lower costs and increased employee happiness. Employees like the increased flexibility and autonomy. It’s been reported by Recruitment Agencies that candidates are no longer looking for a 5 day per week, 9am – 5pm job – they want, and are insisting on, increased flexibility in a new role.

Challenges:

The culture of remote working is not without its challenges. Managers and Business Owners are concerned with managing results remotely; keeping people engaged and keeping an eye on employee wellbeing and metal health. All these areas are certainly a concern, but there are a few things you can do to minimise the impact.

How do you manage results with more people working remotely?

Some Managers and Business Owners are really concerned with how you manage performance remotely. They are worried that their employees are not spending all their working day working as they should be. BUT – if they’re getting the job done and getting the results – does it really matter? There are a few things that can help ensure that the results are met:

  • Clear individual KPIs (linked to business KPIs).
  • Regular reviews and conversations.
  • Clear job descriptions.
  • Development plans.
  • Having difficult conversations quickly – nip any negative behaviour in the bud – more likely to fester when WFH.

How do you keep people engaged?

Often, it’s the social side of things that people miss – the chitchat; the team lunches and nights out. Other than being in regular contact, here are some things you can do to keep employees motivated, engaged and feeling part of the team whilst working from home:

  • Virtual wine and cheese tasting evenings.
  • Zoom quizzes.
  • Fancy dress competitions.
  • Smaller teams of up to 6, meeting up for lunch or in the pub for a drink.
  • Sending out small gifts to say thank you for all the effort and to show that they haven’t been forgotten about.

Engagement is about the team sharing a common purpose and working towards that goal. It takes regular constant communication and commitment. The most important things are Trust and Empowerment.

How do you keep an eye on employee wellbeing and their mental health?

  • Regular 1 to 1 meetings are essential.
  • Employee Survey to understand how your employees are feeling.
  • Individual DISC report on remote working to understand how they might adapt to working from home and what their individual challenges might be accordingly to their behavioural preferences.

If you have any queries, please do not hesitate to contact Lissa or Chrissie

Kickstart Scheme

The Kickstart Scheme provides funding to employers to create job placements for 16 to 24 year olds.

How the scheme works

You can use the Kickstart Scheme to create new 6-month job placements for young people who are currently on Universal Credit and at risk of long-term unemployment. The job placements should support the participants to develop the skills and experience they need to find work after completing the scheme.

Funding is available for 100% of the relevant National Minimum Wage for 25 hours a week, plus associated employer National Insurance contributions and employer minimum automatic enrolment contributions. There is also £1,500 per job placement available for setup costs, support and training.

Funding is available following a successful application process. Applications must be for a minimum of 30 job placements. If you are unable to offer this many job placements, you can partner with other organisations to reach the minimum number.

If you are a representative applying on behalf of a group of employers, you can get £300 of funding to support with the associated administrative costs of bringing together these employers.

Kickstart is not an apprenticeship, but participants may move on to an apprenticeship at any time during, or after their job placement.

The Kickstart Scheme is available in England, Scotland and Wales.

Who can apply for funding

Any organisation, regardless of size, can apply for funding.

The job placements created with Kickstart funding must be new jobs. They must not:

  • replace existing or planned vacancies
  • cause existing employees or contractors to lose or reduce their employment

The roles you are applying for must be:

  • a minimum of 25 hours per week, for 6 months
  • paid at least the National Minimum Wage for their age group
  • should not require people to undertake extensive training before they begin the job placement

Each application should include how you will help the participants to develop their skills and experience, including:

  • support to look for long-term work, including career advice and setting goals
  • support with CV and interview preparations
  • supporting the participant with basic skills, such as attendance, timekeeping and teamwork

Once a job placement is created, it can be taken up by a second person once the first successful applicant has completed their 6-month term.

If you require any further information, or wish to discuss this with a member of our team, please contact Lissa.

Millions of self-employed to benefit from second stage of support scheme

Millions of self-employed people whose livelihoods have been affected by coronavirus will be able to claim a second payment of up to £6,570 from today – as the government continues to help drive the UK’s recovery.

  • second stage of Self Employment Income Support Scheme (SEISS) opens for applications today
  • those eligible will receive a government grant worth up to £6,570
  • over 2.7 million people have benefitted from the scheme so far, receiving £7.8 billion

Over 2.7 million benefited from the first stage of the SEISS – with the government handing out £7.8 billion of grants to help them through the crisis.

Those eligible will now be able to receive a second and final grant worth 70% of their average monthly trading profits, with the money set to land in their bank accounts within six working days of making a claim.

Anyone whose self-employed business has been adversely affected by coronavirus since 14 July is eligible for the scheme.

Chancellor of the Exchequer Rishi Sunak said:

Our self employment income support scheme has already helped millions of hard working people, whose get up and go drive is crucial to our economy.

It means that people’s livelihoods across the country will remain protected as we continue our economic recovery – helping them get back on their feet as we return to normal.

HMRC will contact all potentially eligible customers to advise them that they can claim for a second and final SEISS grant.

The eligibility criteria remain the same as for the first grant, with people needing to have had trading profits of no more than £50,000, making up at least half of their total income.

The SEISS is part of a comprehensive package of support for self-employed people, including Bounce Back loans, income tax deferrals, rental support, increased levels of Universal Credit, mortgage holidays and the various business support schemes the government has introduced to protect businesses during this time.  

The Chancellor has also set out the government’s Plan for Jobs to support, protect and create jobs up and down the country- including in the construction and housing sectors through funding to decarbonise public sector buildings and our Green Homes Grant.

Further information

  • Guidance on how the grant works can be found here.
  • Eligible customers will be informed that they will be able to make their claim for the second and final grant at any time from a specified date, until the scheme closes on 19 October 2020.
  • For the first grant, self-employed individuals in Scotland have made 155,000 claims totalling £449 million; in Wales 108,000 claims for £289 million have been made and in Northern Ireland 76,000 claims for £216 million have been submitted. In England, 2.2 million claims were made totalling £6.4 billion.

September changes to Furlough

  • From 1‌‌‌ ‌September CJRS will pay 70% of usual wages up to a cap of £2,187.50 per month for the hours furloughed employees do not work.
  • Employers will still need to pay furloughed employees 80% of their usual wages for the hours they do not work, up to a cap of £2,500 per month. Employers will need to fund the difference between this and the CJRS grant themselves.
  • The caps are proportional to the hours not worked. For example, if an employee is furloughed for half their usual hours in September, employers are entitled to claim 70% of their usual wages for the hours they do not work up to £1,093.75 (50% of the £2,187.50 cap).
  • Employers will continue to have to pay furloughed employees’ National Insurance (NI) and pension contributions from their own funds.

Further guidance and live webinars offering you more support on changes to the scheme and how they impact you or your clients are available to book online – go to GOV‌.UK and search ‘help and support if your business is affected by coronavirus’. 

We are still receiving very high demand on our phone lines and webchat, so the quickest way to find the support you may need is on GOV‌.UK. This will leave our phone lines and webchat service open for those who need them most. 

Making sure your data is right

It’s important that you or your clients provide all the data we need to process your claims. Payment of employers’ grants may be at risk or delayed if they submit a claim that is incomplete or incorrect, so we want to help them get this right. We will get in touch if we see any employee data missing from previous claims.

You or your clients can find everything you’ll need to help make a claim on GOV‌.UK, including a useful calculator and guidance on the data you need to provide and the format you need to use to ensure your claim is accepted. Search for ‘claim for wages through the Coronavirus Job Retention Scheme’.

If you or your clients are claiming for 100 or more employees, please download and use our template as this will help you make sure your data is right – search ‘download a template if you’re claiming for 100 or more employees through the Coronavirus Job Retention Scheme’ on GOV‌.UK.

Finding previous CJRS guidance

We’ve recently updated our CJRS guidance to make it easier to find the most relevant, up-to-date information.

If you or your clients need to check older guidance – for example information for your claims ending on or before 30 June – you can search ‘check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme’ or ‘check which employees you can put on furlough to use the Coronavirus Job Retention Scheme’ on GOV‌.UK. A link to previous guidance can be found in boxes at the top of these pages.

Protect yourself from scams  

Stay vigilant about scams, which may mimic government messages as a way of appearing authentic and unthreatening. Search ‘scams’ on GOV‌.UK for information on how to recognise genuine HMRC contact. You can also forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.  

August changes to Furlough

Changes to the Coronavirus Job Retention Scheme from 1 August mean that employers will need to pay National Insurance (NI) and pension contributions for furloughed employees from their own resources as these will not be covered by future grants.

Make sure you have the latest information by joining a live webinar:

Extension to the Coronavirus Job Retention Scheme and flexible furloughing

HMRC will provide an overview of the scheme, including flexible furloughing, examples of how to work out the amount you can claim, and the changes due in September and October.

Choose a date and time

If you haven’t been able to join their popular webinar about the Coronavirus (COVID-19) Statutory Sick Pay Rebate Scheme, more dates have now been added. Get the latest information on:

  • who can claim
  • who you can claim for
  • how to make a claim
  • what you may be entitled to, and more.

Choose a date and time

You can ask questions during all the live webinars using the on-screen text box.

Their webinars are constantly updated to provide the latest government guidance on changes as they develop.

If you have any particular queries regarding your business please contact Nicky.

Increasing prices doesn’t have to mean losing customers

Small businesses depend on their established customer base, so the idea of raising prices can be scary; this causes SMEs to be caught in a cycle of undercharging for their product, which can lead to devastating effects. There are, however, several methods that will help minimise the potential damage of price structure changes.

Distinguishing value from price

In the event that you raise your prices, your customers are inevitably going want an explanation that is backed by well-thought-out evidence. Thus, it is crucial that you have distinct, clear, and understandable reasons as to why your product price is increasing. By demonstrating to your customer that your product is of superior quality and value, especially when compared to your highest charging competitor, your customer will see that regardless of the price increase, your business is still the right decision.

Minimising risk for the customer

Customers usually don’t mind paying a little extra if they know that their money is protected and there is very little risk in their decision. By offering explicit guarantees on your work, customers will be more willing to spend their money on a more expensive product. Guarantees should be structured in a variety of ways, with the goal of having a guarantee that meets the needs of different customers.

“Discounts are one of the best ways to entice a customer to make a deal and you don’t have to lose money in the process.”

Restructuring your prices

Simply increasing prices can be a bit too upfront for some customers, so it may be best to change the overall price structure. You can break the price up into a payment schedule so that the customer can pay overtime instead of all at once. This allows the customer to see your product or service more as an investment rather than a simple purchase. You can also change how you charge separate costs; for example, you can charge separately for installation, delivery, storage, or urgent orders. Or, you can create special packages of these that do not necessarily lower the price, but change the way it is proposed.

Discounting

Sometimes, discounts are one of the best ways to entice a customer to make a deal. But, you don’t have to lose money in the process. By switching flat-rate discounts (like 5% on all products) to step discounts (10% on the first £1000, then consistent amounts for the following £1000s). These discounts are more attractive to customers, and the increased business often accounts for the discounts.

By using these tactics, you can keep your business afloat and at par with the economy, all while maintaining your client base and image. If you find yourself having difficulty implementing these strategies, a professional may be able to help!