How do you adapt your pricing to inflation?
How do you adapt your pricing to inflation?
The Consumer Price Index (CPI) rose 7.5% in 2021, faster than any time since 1982.
Increasing prices to match inflation is a slippery slope.
Many companies’ knee-jerk reaction is to raise prices at or around the rate of inflation, but doing that can ruin customer relationships.
However, keeping prices the same will eat up profits and could even put you out of business.
According to McKinsey, here are 5 ways to ADAPT your pricing to inflation:
Focus on total customer and product profitability, not just cost changes
Customize price increases for each customer and product segment, but remain competitive on key items
Have a cross-functional team of dedicated decision makers to manage price increases
Reimagine product and/or adjust product designs to help manage costs
Meticulously track performance management and make adjustments as you go
Finally, don’t forget to clearly communicate the steps you’re taking when dealing with inflation. Tell your customers you recognize the problem, and that you're taking thoughtful steps to manage pricing while keeping them top of mind.
At Value Logic Solutions, we’ll help you find ways to communicate price changes to your existing customers. We'll also find the pricing model that'll generate the highest profits for you. Are you ready to stop underpricing your products and services? Get our free pricing system today!
Q. How are you adapting your pricing to inflation?