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VAT And Inflation - To Rise or Not To Rise - 04/01/2011

The 4th Of January 2011.  At midnight the rate of VAT rose to 20%, the highest VAT rate in this glorious country's history.  It means that except for food and a few other exceptions everything I purchase will now carry an extra 2.5% in the VAT department.  My fuel will cost more, TV's, car spares, vacuum cleaners, tools, clothes and all the daily detritus of life will go up.  Speaking of fuel, petrol is rising at an alarming rate too.  The rising cost of fuel leads to rising transportation costs, this in turn leads to additional price rises in stores as they cover their expenses.  It is going to be interesting to see just how much costs rise over the next few months. 

So now here at TechSolus towers I face an ever present dilemma, prices.  Currently I charge £20 for the call out and a further £25 per hour.  Should I raise my prices to cover my own increasing expenses?  If I raise my prices I may lose a few customers and I may also be less likely to gain new ones too.  But if I don't raise my prices I will be working just as hard but for less return relative to my buying power.  Is it better to be busy at my current prices or to charge more to make more on fewer jobs? 

It is my intention to leave prices as they are until the end of this tax year, in April.  That will give a further 4 months to monitor the price changes and see how much impact it has on my finances.  It will hopefully give me a little time to monitor how the market changes too.  Lets hope 2011 is not quite as bad as David Cameron has warned it will be.

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