Raising Prices

The decision to take a price is usually a road littered with many debates and often without support from all parties. In mature or static markets a price rise is the only way to get earnings growth. Where commodities demand is outstripping supply, input material cost increases will crunch your earnings without a strong hand on the pricing tiller.

A price rise is critical to ensuring healthy margins and protecting profits. A simplistic +3% increase with a sales letter of explanation and an apology is the standard approach to communicate an impending price rise to customers.

What happens next is the nightmare for all CFOs. The List Price is raised and then immediately dealt back through special discounts and rebate arrangements. Or worse still the customer rejects the price rise and switches to the competitor. The price rise can actually send earnings backwards.

How Pricing Insight can help your business

Pricing Insight's Margin Expansion Planning (MxP) program allows you to get control of pricing and ensure that the value you generate for customers is reflected in the price paid by the customer.

The key elements to the management of a price rise include:

• Policy driven price management – ensuring the principles of segmentation and product strategy form the basis of pricing adjustments off List.
• Value based Price Menus – allowing the customer to self select value from a structured pricing offer.
  
• Volume for Value negotiations – allowing customers to renegotiate trading terms to account for a price rise and minimise customer defections.

To find out how you can ensure the implementation of an effective price rise in your business, call or email Pricing Insight.

Contact Us

Email: action@pricinginsight.com.au
Phone : +61 2 9973 4099