Business Profits Hit as Prices Struggle with Market Fluctuations: Study

Global research among pricing professionals reveals that 80% of businesses’ profits have suffered because prices couldn’t keep pace with rising costs and changing market conditions. A study conducted by FlintFox found that on average businesses estimated they lost $478,000 in potential profit as a result of not being able to change prices fast enough and 87% of pricing professionals are worried about their ability to respond to future volatility.

John Moss, chief executive of Flintfox says,“In the face of ongoing instability driven by demand fluctuations and cost volatility due to supply chain disruption, businesses have learnt to adapt their pricing strategies. But the ability to roll out fast, responsive price changes still elude too many organizations.

Key Takeaways:

• As market conditions continue to be challenging, businesses are attempting to adopt more sophisticated pricing strategies with mixed success. Most businesses now employ tailored pricing for different regions and sales channels to maximize revenue and margin opportunities, but according to the research, 64% find it challenging to roll-out their complex channel pricing and 62% struggle with regional pricing strategies.
• In addition to the lag between market changes and pricing changes, respondents also believe that pricing errors have negatively impacted margins. Despite widespread digital transformation, 40% of businesses still rely on spreadsheets for pricing management to supplement their ERPs, leading to inaccuracies.
• Nearly two thirds of businesses say they lack the ability to model price changes in advance, so critical pricing decisions are being made without an understanding of the likely impact.