Supply-aware dynamic pricing enables companies to meet demand and protect margins in a new and shifting landscape, as the authors explain.
As 2023 begins, many B2B companies are still experiencing the effects of the supply chain crisis that defined much of 2022. Unfortunately, there is no single one-size-fits-all solution to tackling the pricing implications of the current global supply chain crisis. However, by applying the pricing principles in this article, B2B companies can deliver better results in the near term and be better prepared for future supply chain challenges, as the authors explain.
In this article, the author examines the inflationary issues at hand and how pricing can assist in calming the inflation storm and make sure pricing teams are ready for any other disasters they may face. Because let’s face it, this won’t be the last time we face dramatic shocks to your ecosystem – 2008 crisis, anyone?
While we may have all hoped that the surge in the cost of raw materials and pandemic-related disruptions would dissipate, the truth is that we’re now in a significant period of inflation with most companies needing to increase prices in the high single digits or low double digits just to stay neutral. Instead of simply looking at typical “across the board” price increases for 2022, consider these three strategies to reduce customer resistance to a large price increase: Pricing’s Power of 1%, cost-to-serve, and value-based pricing.
The COVID-19 pandemic has taught us many lessons, not the least of which is the value of a reliable supply chain. If you can become a reliable supplier, it’s time to price for that ability. Once your customer internalizes your value, the conversation about your prices has completely changed. The conversation is no longer about you discounting to close the deal, but instead, about your value as a reliable supplier, as the author explains.
There is a lot of uncertainty in the system right now. Things are improving, but global supply chains are fragile. And it is quite possible that the most recent stimulus bill will create even more e-commerce demand, which will send even more products into this already scrambled supply chain. There are opportunities for any company that can adjust to the present environment, as the author explains.
As the economy begins its post-COVID recovery, coupling disrupted supply chains with increasing demand and rising materials costs, managing pricing dynamically and doing so ethically (and with the best interest of supply chains) is important. We cannot forget that short profits might damage long-term reputation and credibility, as the author explains.