Insights

5 Tips for Managing Pricing Amidst Inflation

Table of Contents

It's a question CFOs and others responsible for profitable growth have been asking for the past few years: with inflation and supply shortages putting pressure on companies operating across many industries, how do you best manage pricing? 

In this context, customers do expect fluctuations in prices, and suppliers can benefit from a strategic approach for implementing these price changes. Here are five tips for adapting your prices to compensate for an inflation environment.

1. Make Your Organization More Nimble and Agile

In a stable environment, companies have a certain pace at which they review prices. However, inflation forces businesses to act with more speed. As a result, companies need to have the capability to promptly refine their pricing strategy, having both visibility and understanding of their macroeconomic environment as well as insight into their own data, to generate new prices more frequently. 

2. Turn Inflation into an Opportunity for Strategic Price Adjustments

During inflation, customers expect changes in pricing. This opens an opportunity for businesses to revisit their pricing strategy and potentially hit reset. While many companies will look to bring customers with very low profitability into a more standard range, they shouldn’t overlook customers who have just ‘average’ profitability. This group typically represents the largest opportunity for price change. It’s important to leverage segmentation and science to determine who they are, how they buy, and how to best move them towards the optimal price.

3. Look at Your Pricing Structure

Pricing structure enables the flexibility to adapt to a volatile cost environment when necessary. This might entail looking at building in pricing adders, up-charges, or surcharges. Another important element is the terms and conditions to allow the company to adjust prices within contract terms. More volatile cost environments require greater flexibility to adjust prices as necessary.

4. Carefully Plan Your Rollout of New Prices

It would be a mistake to think that because customers expect pricing changes, companies can proceed without the strong enablement of their sales team. According to a recent study by McKinsey & Company, 2/3 of price increases end up unrealized due to the lack of strategy, policy and process support. The positioning of the price change is very important and companies shouldn’t underestimate or minimize the enablement of the sales team. They need to be well equipped with details on cost changes, relevant data and even receive proper training on how to handle difficult conversations with customers. This phase is critical in ensuring transparency internally and externally so price changes can be well received and accepted.

5. Make sure you have the right systems and infrastructure

In an inflationary period, time is of the essence. Companies that have the right tools and systems in place to make well-informed decisions in a timely manner will perform better. Organizations that leverage AI have visibility into customer and product profitability to analyze data more frequently. This empowers them to execute change faster — making them more likely to better navigate through seasons of inflation.

For additional ideas on pricing strategies in times of inflation, we also recommend this article by McKinsey & Company.

About PROS

The PROS Platform offers pricing teams the means to effectively manage dynamic price strategies from a centralized hub — enabling customers to analyze, optimize, and deliver tailored pricing for every customer, through every sales channel, in real-time. Thus converting inflation from a challenge into an opportunity.

Other content in this Stream

Can Flight Search Initiation Be Used as a Proxy for Flight Bookings?

This study shows how Flight Search Initiation (FSI) can serve as a strong proxy for bookings when airlines lack access to reliable eCommerce data.

Airline RetailAirline RetailingBlog

Unlocking Airline Value with Offers & Order Management

Learn how Offer & Order Management drives efficiency, personalized retailing, and ROI for airlines. Discover why modular transformation is key to success.

Blog

Offers and Orders Transformation & Modern Airline Retailing With PROS

Explore how modern airline retailing evolves with open and modular API-based technology. Discover strategies to enhance revenue, drive customer satisfaction, and optimize offers and orders.

Airline RetailAirline RetailingAirlinesBlog

5 B2B Buying Behaviors You Can’t Ignore

Discover the 5 B2B buyer behaviors redefining sales and learn how companies can adapt their sales strategies to win in a buyer-led world.

BlogOmnichannel Commerce

Top 5 Selling Challenges and How CPQ Solves Them

Discover how CPQ helps manufacturers solve top sales challenges like quote delays, configuration issues, and pricing errors. Boost efficiency and profits today!

Blog

Unlocking Digital Selling Strategies Across Industries

Discover how United Airlines and TE Connectivity modernized B2B sales with Smart CPQ. Boost profitability while reducing sales complexity.

Blog