Part 6: Monitor & Adjust

Heraclitus once said: “The only constant in life is change.” – and this applies to pricing as well. There’s a lot of factors to consider for agile and periodic review. Here are some:

➡️ Macroeconomics factors: how are the costs of our raw materials, transportation, etc., changing? If your product depends mostly on a commodity, it’s mandatory that you keep track of its price and trends. If its price decreases and it’s expected to continue this way, yay for us! This can give us flexibility to be more promotional, or we can just keep the extra profit!

➡️ Market reception: are consumers buying your product? What’s “the word”? Is your product taking time to take off? Could be time for a promotion or increased marketing support. Get this info from the Sales team, surveys, reviews, social forums, or talk directly to your customers!

➡️ Competition: how are your competitors reacting? Are they lowering prices? Competitors may become promotional, but your product may have a superior value proposition and may not affect it that much. Be sure to have all the info before sacrificing margin. Consider that your competitors’ reaction may not be on pricing, they may increase marketing support – are you ready to do that too?

➡️ Internal processes: I’ve been in manufacturing for years… I’ve learned this factor is a big deal when it comes to pricing. Ideally, manufacturing is always under continuous improvement – increasing efficiency, decreasing costs, giving us flexibility to act and react in a dynamic market environment. When inefficiencies impact our costs negatively, it’s my personal belief that it should not impact pricing, at least not right away. What do we do when this happens? I would exhaust all my options before increasing the price (fix inefficiencies, adjust product design or raw materials that will NOT affect performance or perception, etc).

And promotions! It’s always good to have a promotional calendar to generate demand, with clear sales goals, breakeven points and post-promotional analysis. Consider all relevant holidays or events in your industry for your plan.

When we’re ready for a price adjustment, we need to consider its roll-out. Do we have contracts or agreements with business partners? When it comes to numbers & pricing timely communications is key.

This post closes my series on Product Management with a Pricing focus. Thanks for reading! Please leave your comments below and share if you find this interesting.