Executive Briefings

Squeezed by Consumers and Suppliers, You're in a Pricing Bind Now

Odds are good that layoffs, capital-spending cuts, and product-line eliminations have moved to the top of your company's to-do list. Unlike other downturns, this one is squeezing companies on both ends: even as consumers suffer from sticker shock, suppliers have jacked up prices as they pass along rising fuel and commodities costs.
That puts companies in a pricing bind. Many may decide that despite their own higher costs, they must cut prices to keep customers. But Rafi Mohammed, author of The Art of Pricing, warns that if you "keep lowering the price you'll sell more units, but you'll also devalue the product. For the sake of the short term, you can wreck the long-term value of your brand." And price cuts can be hard to rescind when economic conditions improve.
So how can you keep business up without lowering profits?
Source: CFO

Odds are good that layoffs, capital-spending cuts, and product-line eliminations have moved to the top of your company's to-do list. Unlike other downturns, this one is squeezing companies on both ends: even as consumers suffer from sticker shock, suppliers have jacked up prices as they pass along rising fuel and commodities costs.
That puts companies in a pricing bind. Many may decide that despite their own higher costs, they must cut prices to keep customers. But Rafi Mohammed, author of The Art of Pricing, warns that if you "keep lowering the price you'll sell more units, but you'll also devalue the product. For the sake of the short term, you can wreck the long-term value of your brand." And price cuts can be hard to rescind when economic conditions improve.
So how can you keep business up without lowering profits?
Source: CFO