Energy Costs Are the Hidden Margin Crisis for Manufacturing SMEs — AskBiz Helps You Quantify It

Why energy costs are a permanent challenge for manufacturing SMEs#

Energy prices spiked dramatically in 2022 following Russia's invasion of Ukraine. While they have moderated since, they have not returned to pre-2022 levels — and they are unlikely to. For manufacturing SMEs — foundries, food processors, textile mills, ceramics manufacturers, any energy-intensive process — this is a structural margin headwind that will not resolve itself. The question is not whether to adapt, but how.

Calculating your energy cost per unit with AskBiz#

The first step is quantification. AskBiz lets you upload your energy cost data — electricity and gas bills, by month — alongside your production volume data, and ask: what is my energy cost per unit of production? How has this changed over the past 12 months? Which product lines are most energy-intensive? This calculation turns an abstract cost into a specific number on every product you make — and that number needs to be in your pricing.

The efficiency investment ROI calculation#

Many energy-intensive manufacturers are considering efficiency investments — LED lighting, improved insulation, more efficient machinery, on-site solar generation. AskBiz can model it: if I invest £40,000 in solar panels that reduce my electricity bill by £8,000 per year, what is the payback period? What is the margin improvement per unit in year one and year two? How does the ROI change if energy prices rise 15%? You get a specific answer that helps you make the investment decision.

Shift patterns and energy cost management#

For manufacturers on time-of-use electricity tariffs, when you run your production matters as much as how efficiently you run it. Night-shift production at off-peak rates can significantly reduce your energy cost per unit. AskBiz can model the labour cost of shifting production to off-peak hours against the energy cost saving, and tell you whether the shift premium pay is worth the energy rate saving.

Passing energy costs on to customers: the right way to do it#

If your energy costs have risen permanently, your pricing needs to reflect this permanently. AskBiz can calculate exactly how much of a price increase you need to offset your energy cost increase, and model the volume impact of that increase. If you need a 4% price rise to offset energy costs, and your market can absorb 3% before volume drops, AskBiz will show you the exact trade-off and help you find the optimal price point by product.