Inflation is an inevitable part of economic growth, but it can pose a challenge for businesses trying to maintain profitability while keeping prices competitive. As the cost of goods and services rises, businesses are often forced to increase their prices, but this can lead to customer dissatisfaction and lost sales. So, how can businesses adjust their pricing to inflation without losing customers? One effective strategy is to ADAPT (Adjust, Develop, Accelerate, Plan and Track) your pricing to inflation. Keep reading to learn how you can increase your margins while also keeping your customers loyal.
ADAPT Inflation Pricing Strategy
Simply raising your prices without any strategy behind it can damage your business across the board. The ADAPT method supports long-term value for your customers and your business. Here are the five steps explained:
- ADJUST: Don’t chase the market. Get through inflationary cycles by adjusting discounts and promotions. Large amounts of money can leak away from base prices when customers receive discounts, incentives, promotions and giveaways.
- DEVELOP: Some customers will be more sensitive to price increases. If you’re a retailer, you can stay competitive on key-value items, while passing on most cost increases through secondary items. If you’re a B2B company, try using a dynamic segmentation tool to see which customers will be more price-sensitive versus customers who will more easily absorb cost increases.
- ACCELERATE: Move quickly to gather data and analytics on key metrics, pricing, and customer reactions to price changes. This will help you optimize pricing and stay competitive in your industry.
- PLAN: There is more to this strategy than simple pricing. Reimagine your products and their design – can they be produced in a way that will reduce cost while also maintaining functionality?
- TRACK: Gather information from analytics that can help forecast future margins and recommend pricing actions. Rigorously tracking this information will help your company get through this inflationary cycle and the next!
Strategy for this Inflation Cycle and the Next
Using the ADAPT pricing strategy will enable you to maintain margins while minimizing the risk of losing customers. If you need any help during this challenging time of inflation, Rockton Software is here with Rockton Pricing Management (RPM), the most flexible, powerful, multi-platform pricing solution ever available. It can automate even the most complex and obscure pricing scenarios and calculations. Have you been inspired to ADAPT and adjust your rebates, commissions, and promotions? RPM can easily track them. Click here to learn more!