Defending market share and price levels: Managing prices in a downturn

Published on May 10, 2023

Demand has slowed down and wages are rising at an alarming pace. In the current market, sustaining turnover and protecting shareholder value through margins is becoming increasingly challenging and requires close attention from management.

Here we share two typical downward pricing mistakes that we often observe and tips on how to avoid them:

Pitfall 1: Think that price decreases will bring more volume

Weak demand is a result of current macro conditions, making excessive price reductions mostly ineffective in stimulating demand. Instead, offer price reductions selectively and anticipate the possible competitive reaction.

Pitfall 2: Assume that index pricing is the “magic bullet” to price simultaneously with cost dynamics

Main cost drivers like wages and raw materials are moving in opposite directions right now. Index-based price decreases often fail to…

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