Pricing
How to price when your costs change every quarter
How to protect your margins when supplier costs change several times a year.
Most distribution and manufacturing companies still update prices once a year, while their suppliers now change prices several times a year.
Price the change, not the year
Instead of one big increase every January, set a rule: when a key input moves more than a set amount, prices follow within thirty days. Customers accept a rule much more easily than a surprise.
Separate the stable from the volatile
Usually ten to fifteen percent of products carry most of the cost movement. Put those on short-dated quotes and leave the rest on the annual list.
Tell customers early
A short note sixty days ahead, with the reason and the date, does more for retention than any discount. The clients who did this lost almost no accounts.
Check margin monthly
If you only look at margin when the year closes, you find problems twelve months late. A monthly view by product family is enough to catch most of them.
