I used to employ design engineers straight from University and threw them in the deep end by giving them live projects as part of their training. They almost always provided designs where the finished product was far outside what people would or could pay.
On one occasion I asked a young talented designer “ do you not understand what price point is”. “No”, he said. This fellow was mad about cars so I said “if I offered you a brand new Holden for $100K what would you say”. “You were ripping me off” was the answer. “If I was to offer you the same new car for $20K what would you say” “There’s something wrong with it”, was his answer.
He now understood price point. It was somewhere in between. He quickly learned to produce excellent designs at a price our customers would pay that still returned a good profit.
The problem is Government has never understood this. So they impose new taxes, charges and red tape on small business without considering the consequences.
Big business, especially monopolies, can get away with simply putting up prices or squeezing their suppliers to cover the impost….small business can’t.
They often have little choice other than to cut costs by reducing staff. If they try to raise prices and people stop buying then they face closure. Either way its bad news for the economy, especially as small business accounts for more than 70% of private sector jobs.
Government needs to talk to Small Business and recognize the impact of their decisions on price point before they introduce their change.
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