Post Pandemic, the global market has seen a high level of inflation. Industries all over the world have been affected by the volatile monetary market. It has drastically shaken up the fundamental revenue structure of companies. That is why pricing being at the core of any company, has to be well strategized at every level. Especially industries that are constantly dealing with highly competitive prices need to monitor every pricing movement with utmost scrutiny.
In 2022, the food industry saw a 16% increase in the European market and a 14% increase in the U.K. And even though the National Retail Federation projected growth between 6-8%, which is approximately $4.6 trillion in 2022, retailers must also keep a constant track of their competitors.
What is Inflation?
Mckinsey describes inflation as a slow decline in the consumer’s ability to pay for goods and services. Another reason for it is when the supply of a product is less, due to which sellers usually increase the prices. According to a report, the inflation rate in the United States rose to 7.5% in 2022; this has been the highest since February 1982.
That is why repricing is such a crucial aspect of inflation. Companies need to strategically raise the prices of their products or services without causing a depreciation in the number of customers they have. And these repricing strategies have to be constantly monitored and have to be well thought of. It cannot be created in a state of absolute frenzy, as the repercussions might be catastrophic.
In this fluctuating market, companies need the assistance of artificial intelligence and machine learning. One of the main reasons for this is to protect profit margins without disrupting customer loyalty and tarnishing the brand image. AI-powered pricing solutions like BRIO are programmed to predict market movement in advance and create pricing strategies based on 112 factors, including competitive intelligence and consumer insights.
Best Ways to Deal with Pricing During Inflation
Inflation can cause companies to go into a major loss, but this can be managed if the repricing strategy is intelligent and flexible for the ever-changing market.
Here are a few tips that will help you keep your company afloat and ensure customer loyalty.
- Get Your Prices Right
When inflation hits the market, companies inevitably have to increase the prices of their products to stay afloat. But these pricing strategies can be customized by understanding volatile market movements, acquiring competitive intelligence, performing near real-time price optimizations, analyzing the customers buying behavior and then creating revenue maximization strategies. After analyzing multiple factors, the company’s decision-makers can create the most impactful pricing strategies for a volatile market adversely affected by inflation.
- Extract Deep Customer Insights
Companies might believe that customers are expecting the prices to rise, and in times of inflation, this may be true. But AI-powered insights will let you know which customers might be willing to pay even when the costs are high or how much they will be able to pay. This way, you can create a pricing strategy based on the customers buying behavior and not purely on the assumption. These strategies can be dynamic and can change as per the buyers’ shopping habits and journey. Once your company gets a detailed analysis of the same, it can create high revenue-generating pricing strategies.
- Reduce Company Costs
Creating an effective pricing strategy is one of the best ways to tackle inflation. Another promising method is to check the company’s costs. There might be ways to reduce some costs in the company and help a company manage their spending effectively. Clubbing a strong pricing strategy and a tactful plan to reduce costs can help a company manage their sales and inputs during the tedious times of inflation. This is one of the best ways to manage pricing during inflation.
- Track Your Competition
While creating a pricing strategy during inflation, it is vital for a company to keep a constant eye on their competitors. When the market is volatile, customers become hyper-vigilant and keep checking the prices of the products on a daily basis. Due to a surge in prices, they will keep a constant eye on your competitors’ prices. That is why it is essential for you to keep an eye on the same. By tracking your competition, you will be able to customize your prices and plug revenue leaks swiftly.
- Equip Your Team
Once your pricing strategy is well planned, the company needs to update the sales team and give them essential training to deal with the changes in pricing. Customers may not always react well to a rise in prices. Make sure the team is aware of all the price changes of the products or services sold by the company. This way, they can tackle any issues that come their way and still bring in sales.
Now that we have understood the best tips to tackle inflation let’s understand the best pricing strategies companies can implement for revenue maximization.
Top 3 Pricing Strategies that help tackle inflation
A volatile market doesn’t necessarily mean that a company has to face massive losses. With the help of AI-powered pricing tools, pricing managers can create agile pricing strategies to deal with pricing during inflation. Let’s take a look at some of those strategies.
Dynamic Pricing Strategy
Dynamic pricing allows a company to optimize their prices multiple times a day based on the demand, competitor’s prices, market intelligence and other vital factors. AI-powered tools backed with scientific rigor allow pricing managers to automate the pricing process. This enables them to leave pricing to the bots while they can focus on scaling their business. It also reduces the margin of error, as machines are programmed to analyze data with precision. The price changes are also quicker and can be done at a higher rate.
Competitive Pricing Strategy
A competitive pricing strategy is one where the company keeps the prices of their products lesser than all its competitors. Even a small difference in the amount can pull in many customers and result in higher sales. This strategy might not be the best for maintaining the profit margins. But it can help improve sales and aid in managing pricing during inflation.
Key Value Discount Pricing Strategy
High-value discount pricing is when companies promote a low-cost product and bring customers to their website. When they land on the webpage, they are shown products with high-profit margins. This way, the company sells products that cost less and, at the same time, makes profits.
These are the best tips and pricing strategies that companies can use while tackling pricing during inflation. One of the most effective ways is to use AI-powered pricing solutions that help companies scale their business with absolute SPEED & EFFICIENCY!
To know more about AI-powered pricing solutions, book a free demo with us or email our pricing consultants at email@example.com.