Many B2B businesses have reacted to persistent high inflation by raising prices, adjusting their packaging and portfolios, improving analytics, and accelerating their decision-making with tighter pricing governance. But in 2023, uncertainty around demand patterns and cost trends will test the limits of such reactive pricing moves.
As price increases face customer resistance and reach their practical limits, companies will need to find other ways to manage uncertainties and keep their revenues, volume, and margins in balance. They will need to move away from reactive pricing and prepare themselves for what we call resilient pricing.
Resilience is a company’s capacity to absorb the stresses caused by disruptions—such as inflation, the COVID pandemic, and supply chain volatility—and then recover critical functionality and ultimately thrive in altered circumstances.
Resilient pricing entails more targeted actions that can help companies address and remove constraints, meet internal challenges, and explore opportunities to grow amidst uncertainty— rather than merely survive or play defense. It not only expands a company’s range of options, but also establishes the processes and technology infrastructure that enable companies to treat uncertainty as an opportunity which warrants a balance of offensive and defensive strategies.
Implementing resilient pricing will be more of a transition for some companies than an abrupt shift. While most companies have reacted to inflation with tried-and-true tactics, primarily with price increases, some of the most successful companies have begun to adopt practices that will lay a solid foundation for resilient pricing.
Nonetheless, the majority of companies we analyzed in our recent survey still lack a clear plan for managing future volatility. Only 40% have defined plans for holistic, structural pricing actions needed to address the key challenges they face in improving their sales and pricing capabilities.