HPE says the only way is up
I heard a discussion on the radio that focused on the effects of inflation, the cost of living crisis and the energy crisis on restaurants, bars and cafes.
During the exchanges, one of the interviewees revealed he was advised to raise the price of a pint to €12 (I think that’s right, but I was in the car and at one point I thought I heard €17 being mentioned) to break even in the current climate. He argued, quite rightly, that people were unlikely to go out drinking if they found themselves paying €60-€72 over the course of a night for their customary five or six pints – particularly as wages were unlikely to have kept pace with rising prices.
Clearly, the notion of a €12 or €17 pint is preposterous but it shows just how difficult things have become for those in hospitality. A career change to technology might be in order, specifically to Hewlett Packard Enterprise (HPE), if what I saw later that same day on the CRN website is to be believed. The publication reported comments made by HPE CEO Antonio Neri at the XChange Best of Breed 2022 event in response to a question on whether channel partners should raise prices to address the pressures of inflation, currency fluctuations and the impact of energy price rises.
“Yes,” he replied, adding that one reason for HPE’s performance and profitability was “because we have raised prices consistently”.
Not only had HPE raised prices but it was always the first to do so. “Look at Dell. They follow just like that. But they’re never the first movers – never,” Neri stated. “We are the market leader of raising prices. And you have to. There’s no way around it.”
I don’t know about you but to me, that’s a spectacular comment to be able to make in the current climate. It shows a real level of confidence in the business and its ongoing prospects to be able to say what Neri said, out loud, for everyone to hear.
Obviously, HPE’s business is going well and able to justify price rises to customers when they occur. Similarly, customers must be satisfied with the service they’re getting from the vendor if they’re willing to pay more.
From a channel perspective, the position of partners in the middle of the supply chain means they are often the ones passing on vendor price increases to the customer. This puts them in an awkward spot, in theory, but that only applies if customers aren’t willing to pay more. I suspect that if customers respect and value the vendor’s service, it will be much easier to make the argument for increasing prices.
It also helps if there is clarity from the outset. If a vendor says it’s the market leader in raising prices, customers have a clear idea what to expect. They also have a greater understanding of when and why a vendor raises its prices. It makes the decision easier for them too when it comes to deciding whether to pay more or not, if the reason for the increase is stated clearly.
It must be working for HPE because Neri claimed that 2022 will be the “best year ever in profitability and revenue growth” for the company.
What I also like about Neri’s claim is that it’s one of the few market leading statements that any of HPE’s rivals we be in a great rush to try and refute. I can’t see a big queue of spokespeople from other vendors calling press conferences and stating: “No, we’re the market leaders in raising prices.”
Nevertheless, few will find it hard to argue with Neri’s statement that “pricing is the name of the game. It is what you have to do”. Except for the man being advised to charge €12-€17 a pint. He might have something to say about that.
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