When is it Too Long Between Price Increases?

When is it Too Long Between Price Increases?

When was that last time you increased your prices? Many wholesale distributors and manufacturing companies make it an annual event and create a pricing culture within the industry to expect timely increases. But for some companies, the time between price increases is just too long.

Take for example, the specialty chemical manufacturing company that waited 10 years to increase prices for one of its largest accounts. By the time the increase was applied costs had risen significantly enough to reduce margins to negative levels in some cases. The overall profit level of the account suffered and became a drain to the bottom line.

But, perhaps, even more damaging was the expectation created on the customer’s part that price increases just weren’t part of doing business with this supplier. In essence, the manufacturer taught the customer that price increases just didn’t happen. And, the customer firmly pushed back when the supplier finally executed an increase.

Buyers know which suppliers will increase prices and which ones don’t. They know which ones to push back on and which ones they need to accept. You can determine which list your company will reside by the frequency of price increases and the regularity.

About the Author

Ralph Zuponcic

President, PricePoint Partners

Ralph is a national authority on strategic pricing. He has been featured in publications including The Wall Street Journal, Fortune Small Business, CFO Magazine and Marketing News.

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