Pricing In The Post-COVID Economy

Navigating Uncertainty with Pricing Strategies

Amidst forced business closures, market uncertainty and global crisis, pricing remains critical for businesses across different industries. Pricing considerations are the lynchpin that can help a company survive a crisis, protect cash flow and remain in the black.

As one of the world’s leading pricing consultancies, it is our mission to help businesses sustain their profitability and market share during a crisis through changes in their pricing strategy. In light of the COVID-19 situation, the Pricing Solutions’ team is working remotely, leveraging technology to stay connected and on schedule with our projects. We have the infrastructure and processes in place to continue to serve our clients and execute projects virtually. Please reach out to us to talk about how we can support your company with current or emerging pricing challenges, or how we can help you refresh your pricing strategy so that you can “hit the ground running” when normalcy returns.

Ask Us a Question

We want to help your business. If your organization is facing a pricing challenge, we are here to support you.

Simply fill out the form below with your question and we will post a response within 1 business day.

Crisis Pricing – Resources

Webinar on Pricing During Turbulent Times

Paul Hunt’s “Pricing During Turbulent Times; Adapting Your Pricing in Uncertainty” webinar, presented to TEC Canada, provides insights about adjusting and adapting your pricing strategy during this time of economic uncertainty.

learn more

Case Study on Declining Business

Addressing Lost Revenues with Value-Based Guidance

Learn how this $1B+ newspaper company was able to reduce revenue decline by 50% by applying Pricing Solutions’ value-based pricing strategy.

read case study

Blog Articles

Crowd during COVID-19 Crisis

Pricing During Pandemic: Solving 3 Common Pricing Issues

Improving Pricing during crisis

5 Steps to Improving your Pricing Strategy during COVID-19 : Value of 1%

b2c store during crisis

Pricing Considerations For B2C Businesses During A Crisis

b2b pricing during crisis

B2B Companies Can Navigate Times of Crisis with These Pricing Strategies

How to Navigate a Crisis & Keep Branding Intact with Pricing

conducting customer research during covid-19 uncertainty

Is Customer Research During Uncertain Times Reliable?

FAQ

A: Good question. There a few different approaches that you can consider:

  • In a B2B environment, you want to avoid or minimize additional “ad hoc” discounting without associated reductions in cost to serve (i.e. lead time, product quantity and mix like box or pallet, shipping terms, change orders, credit, etc.). You should determine these “give-gets” before talking to your customer(s), so you are ready when asked. This work will have benefits beyond this period of economic uncertainty that we are currently facing.
  • On the B2C side, there are a number of dynamics in play. First is the issue around “trade down”…as there is a downward trend towards “value.” Initially you are likely to see the “bar bell” effect take root…as people that can buy premium continue to do so…and those in the middle-tier start to trade down to value products. Over time, however, you see trading down from the premium to the mid-tier…and continued trade down from the mid-tier to value…creating more of a “pyramid.” With this in mind there a few ways to preserve pricing and margin. One is to increase your pack sizes while holding prices (i.e. deliver more value through lower unit cost). Another is to manage the price differences between your product levels (i.e. value, mid-tier and premium) and package sizes, so that you minimize loss of share and maximize revenues and margins.

A: Thank you for your question. Here are some thoughts:

  • During the Crisis:
    • Over-serve your “best” customers (i.e. high volume, contributing in a large way to your profit dollars). Ensure everyone from Sales, to customer support, to operations, to finance know who these customers are.
    • Try to keep straight discounts to a minimum. And remember that extended payment terms are like an additional 1.5% discount per month for each additional 30 days you allow (based on an 18% WACC divided by 12 months).
    • If possible, only offer discounts if you can get something in return that is valuable to your company (ie extended exclusive contract term, increased volume, prepayment, development of a case study, full truckload orders, full production run orders, etc). Develop these “give-gets” as soon as possible in anticipation of customer requests.
    • Ensure that any discount you offer where you are not able to secure a “give-get” is only valid for a limited time during the crisis (so as to avoid this becoming the “new” market price” or contract condition).
    • Where possible, look to take your already scheduled price increases (so you do not fall further behind)…on products that are in high demand or have low elasticity.

    After the Crisis:

    • Prioritize your organization on your “best” customers first. If volume fell or disappeared from this group during the Crisis, focus your efforts on ensuring this returns to you (and not a competitor).
    • Codify your “give-gets”…they are great negotiating best practices for customers that are price sensitive
    • Evaluate and plan for demand changes. Some volume may never come back…and some increases in volume during the Crisis may be permanent. Others may return to previous levels. This makes pricing and operations tricky.
    • Re-schedule the annual price increases that you delayed during the Crisis…get back on schedule as soon as possible.
    • Re-set the temporary discounts or term changes that you offered during the Crisis.

A: Thanks for your question. In almost, every business and industry COVID-19 is having an impact. On some, like in the sanitization and cleaning products, home telecom services, and in the pharma industries, you are seeing an increase in demand.  While in others you have a mixed experience (like restaurants where inside dining is down or disappeared, but outside dining is up and take out is growing) or are down across the board (like hotels, airlines, and rental cars).  Each has its own challenges related to pricing. Where demand is increasing, should you raise prices, and if so, but how much (they do not want to appear to take advantage of the situation)?  Where demand is mixed, can they use pricing to offset some of the shortfalls in business? And where demand is falling, can a price decrease save some volume (most often not).

Lastly, almost all companies are having to address customer requests for price decreases. This is never easy…and is best handled through “give gets” (ie we can lower price, but you need to provide a 4 week lead time on your orders and must order in full truckloads) and “temporary price reductions” if absolutely necessary.

Contact Us for a Pricing Consultation

Pricing Solutions is one of the worlds’ leading pricing consultancy firms. We are dedicated to helping clients tackle their specific pricing challenges and dramatially grow profitability. Our consultants have extensive experience in B2B and B2C markets within a wide range of industries.

For more information about our services or to get in touch with one of our consultants directly please contact our global headquarters.

Pricing Solutions Ltd.
1 844 943 0505
kjackisch@pricingsolutions.com