To give some background:
My dad is CEO and one of the Owners of a IT-Security-Consulting business or something like that.
He mainly works with larger clients, e.g. a pretty big bank with over 35k employees.
Recently, for whatever reason, I had a discussion with him about prices and inflation and I mentioned the “If you don't match inflation you basically cut your employees' pay” which I learned in this sub.
He proceeded to explain to me that he can't match inflation because his business does not make enough as is to do so, and if he would increase his own prices his clients would go to someone else.
I don't really know much about his business nor his clients, so I can't really tell if that is the truth or not, however, my two main thoughts are:
- If he really does a good job, his clients would be fine with an increase in the price to keep him on board. If they are not, they are either trying to be cheapskates (better/good work for less money) or my dad does not do a good job (which I also don't believe, because then his clients would already be somewhere else).
- If his clients are not willing to even match inflation, this business model does not sound sustainable to me at all (unless you lower profit margins obviously).
What do you guys think about this?