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a blog by Chris Barrow

How do I turn a pay rise into a price rise?

"Tesco hands store staff 7% pay rise.

Supermarket’s third pay increase in a year puts it slightly ahead of Aldi and Sainsbury’s."

So says The Guardian this morning (staff working in London Boroughs will receive 8.40%).

We spent 25 years doing financial forecasting on the reliable basis that your PAYE payroll should be 17.50% of your sales (increase to 20% if your hygienists/therapists are salaried).

That KPI is now rising again and across my own client base I'm seeing between 22.50% - 25.00%.

That's coming straight off your bottom line unless you take action.

Time for a reminder - who is going to pay for those pay rises?

  • Team A - you and your family - take less home;

  • Team B - the staff - employ fewer people;

  • Team C - the self-employed clinicians - pay lower hourly rates/percentages;

  • Team D - your suppliers - try and get cheaper lab and materials;

  • Team E - the patients - put your prices up.

IT'S ALWAYS TEAM E - the patients.

Attached is a handy little calculator to transfer pay rises into price rises. It's one of the many spreadsheets, templates and PDFs that we use here in The Extreme Business 100.

Wages to Price Increase calculator
Download XLSX • 11KB

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