57% of Main Street SMBs Raising Prices Just to Maintain Margins

Small and medium-sized businesses (SMBs) are getting hit with supplier price increases, and it’s showing up in what consumers are paying, too.

For the study “Main Street Health Q3 2022: SMBs Battle Inflation,” PYMNTS surveyed more than 500 U.S.  businesses and found that their own fight with inflation on the supply side is invariably being reflected in higher prices for consumers in industries from construction to professional services.

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While seeming optimistic on the one hand, as 54% of Main Street SMBs we surveyed said they expect revenues to increase in 2022 — that’s below the 56% who felt upbeat in January.

Inflation is the changeable beast that’s keeping outlooks fuzzy, as the study states that 37% of Main Street SMB decision makers cite inflation as their greatest worry for the coming year, while only 23% said so in January. Nearly 45% of retail and consumer services Main Street SMBs express that inflation is the concern that keeps them up at night. General uncertainty about economic conditions is the second most common concern — but distantly so, cited by just 17% of respondents.

“While 68% of construction Main Street SMBs surveyed said they adjusted their prices, just 52% of consumer services Main Street SMBs did the same,” the study notes. “In retail, we found a similar, if smaller, gap between cost increases and price adjustments: 73% of Main Street SMBs in the retail segment said they have experienced cost increases, and 60% of them have raised their prices as a result.”

Additionally, average price increases cited “are generally commensurate with declared cost increases, with product prices increasing 11% and business costs rising by 12%. Personal and consumer services Main Street SMBs are reporting the highest average increase in costs, at 14%, whereas retail Main Street SMBs stand on the opposite end, experiencing an average cost increase of 10%.”

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