How Small Businesses Can Win During Supply Chain Disruption: Pricing


President of Fintrepid Solutions, an award-winning firm delivering customized solutions to support business growth and sustainability.

Disruption in the supply chain is nothing new, and you don’t have to look hard to find data published daily on it. Unfortunately, there is no one simple solution as the current challenges are a perfect storm of multiple factors. Overseas manufacturers are still unsettled from the pandemic, ports are full and there are not enough truckers to move the necessary loads of goods.

This disruption has affected small businesses particularly hard as they often don’t have the resources to stockpile inventory well in advance. And we know this has had a clear link to a meteoric rise in inflation. Like many disruptions we have seen over time, this also creates an opportunity, and there are numerous ways to lay the foundation to take advantage of these opportunities. Things like reexamining pricing sound like an easy solution, but there are many layers of complexity. Here are five key questions to consider.

What is your competitive landscape?

First and foremost, do you have a firm grasp of your competitive landscape? What are your competitors doing? Are they raising prices? Are they struggling to even fulfill critical customers? Do they have stockpiles of inventory or sizeable capital reserves to leverage? Of course, much of this will not be public information, but the word on the street is very powerful. Reach out to industry connections to attempt to paint the broader picture. This is the lens through which other decision points will be evaluated.

Is increasing prices even an option?

Based on the nature of the goods and services you provide, is the opportunity there to raise prices? Depending on the sales cycle of your business, price increases can take months before they take effect, especially for businesses with longer-term contracts. Certain industries and businesses that support government customers, such as in healthcare, have pricing either capped or dictated to them. Each business is very unique in this regard, and they are many shades of gray around it, but key questions need to be asked here.

How much of your own cost increases can you blunt?

This is where the impact of price increases comes into play. Businesses across the board are facing increases in costs of inputs, from labor to raw materials and supplies. For the same reasons with sales cycles, there may be a lag in offsetting the increase in the cost of inputs before your own price changes take effect. Price increases may also need to be staggered to ease the shock on your customers. Understanding the possible net effect of price changes will guide your decision around the amount and timing of price increases.

Is it the right time to raise prices? 

Despite the headwinds and potential impact on profits, raising prices may not be the best move for a business. Using the understanding of the market landscape, does this present an opportunity to perhaps gain market share or reinforce customer loyalty? Many businesses successfully executed this strategy during the earlier stages of the pandemic, strengthening their position with their customer base and peeling customers away from larger, slower-moving competitors. The power of customer service may be a much more impactful tool in building the long-term value of the company than altering pricing.

How much can you raise prices?

After working through the various filters discussed to this point, the last step is centered around the structure of the increases themselves. Are the increases across the board or product-specific? If a staggered approach, are they in even increments or perhaps a jump followed by more measured increases? Do you raise prices faster than the rise in your costs to get out ahead of increasing costs, or is it better to lag?

Scan the environment, do the math and understand the potential impacts. Pricing can be one effective means in the midst of the supply chain chaos, but used poorly, it can also have lasting damage for your business. Understand the levers you can pull and where the ceilings are so options can be thoroughly evaluated. Pricing may seem like the obvious answer, but is it the best answer? A robust evaluation and intentional forward view can make all the difference.


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