Implementing a price rise …. Can you really afford to wait?
With input costs rising; from the current supply issues for almost all commodities, increased pressure on labour rates and ever rising energy costs, there is an urgent need for businesses to adjust their selling prices.
If your organisation is a price leader in your field, then this is easier to do as most of your rivals will simply follow suit and maintain any price differential. In fact, many will be wanting the price leaders in the sectors to take the initiative so they can follow your lead.
This recent white paper from our friends at Zilliant provides a good background to the challenges but also highlights key strategies that can be used to minimise the impact on list prices. https://lnkd.in/dFe-KGNM
Suggested strategies
Increase list price: Obvious but should be done thoughtfully and strategically with consideration of price positioning, discounts / rebates, customer specific and negotiated pricing.
Adjust discount structure / rebates: A good approach if you are not a price leader and should be focused on reducing variable discounts and increasing rebate thresholds. Often difficult to implement quickly.
Allocation: Clear allocation of items that are subject to the fastest or most severe rises to limit exposure to higher prices for newer inventory. Limiting customer purchase volumes to an average of their usual off-take will ensure fair supplies of current inventory for all.
Change sales incentives:
When supply is tightly constrained, average market prices will rise so you need to ensure sales teams do not discount at the usual level. In these circumstances a fast switch to a margin incentive will significantly improve results.
Whatever approach you decide to take, it is essential to act quickly and decisively before you lose even more ground.
If you would like support in any area of pricing or pricing, pricing optimisation or just managing immediate challenges, do get in touch.
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