Chris Dieringer, CCO, Flintfox
Across the world, economies are seeing inflation hit multi-decade highs and the prospect of a global recession looms large. For businesses who have survived the highs and lows of the last three years, the focus now is on getting through the next year. All eyes are on the bottom line and how to protect it
The default for many businesses in times like these is cost-saving, reducing headcount, closing stores or downsizing sites. Although these measures may help to protect profits in the short term, they represent a business risk. They can have a negative impact in the long term by inhibiting growth when recessionary conditions begin to ease and the rate at which costs are currently increasing is so significant that these methods likely won’t be able to provide enough of a cushion to make a lasting difference.
On the other hand, prioritizing pricing provides both an immediate and long-term solution that doesn’t jeopardize future growth. Implementing the right price changes, based on accurate and up-to-date cost data, is the best way for businesses to maximize profits and minimize margin leakage.
Back to basics
Despite pricing being the biggest driver of profit, 42% of companies have yet to implement price rises amid current market challenges and high levels of margin erosion[1]. A key reason for this is that pricing functions in many businesses lack the tools they need to take decisive and effective action. Manual pricing processes – often built around a matrix of spreadsheets – are time-consuming and require teams to spend days laboring over even the most straightforward price adjustments. The delay in implementing price changes prevents businesses and pricing teams from reaching their full margin potential, reacting too slowly to cost changes and market trends.
This manual process also creates challenges when rolling out prices across different regions or channels. The lag often leaves a window in which some customers are paying less than others resulting in even greater revenue loss.
Taking a strategic approach to pricing
Of the companies which have already begun implementing price increases to shore up their bottom line during ongoing market volatility, one in four are introducing blanket changes across products, regions and channels[2]. Implementing price rises across the board runs the risk of alienating customers, and damaging brand loyalty and reputation. Instead, pricing teams need the ability to execute nuanced pricing based on robust data and margin visibility across all categories, customers, regions and SKUs to determine which products need to be ring-fenced and which can afford to be raised to deliver gains.
A digital solution
Throughout the last two decades of digital transformation in business, pricing has been largely overlooked but current market challenges are catalyzing change. By automating price execution, businesses are able to roll-out complex changes with an infinite number of rules simply and quickly, and also have the capacity to focus on strategic pricing projects.
Profit with intelligent pricing
Profitability and pricing go hand in hand, with price as the number one factor influencing purchasing decisions. As businesses face unprecedented pressures and grapple with soaring costs and inflation, it’s more important than ever that they’re making informed decisions, executing changes fast and implementing promotions with precision.
With real-time margin visibility and complete traceability across all aspects of a company’s pricing, intelligent pricing can ensure businesses get their pricing right every time. Intelligent pricing unites disparate data sets and allows businesses to implement changes while matching the speed at which the wider market is changing.
With Flintfox Intelligent Pricing Platform businesses can update pricing in a matter of seconds, and have the ability to make adjustments by region and channel, removing the risks associated with blanket changes, or exposure from leaving some channels lagging behind. Flintfox empowers businesses to execute their pricing strategy with ease and confidence, using its rule-based algorithm and seamless automation designed to improve margins and protect profit while simplifying labor-intensive manual work.
