October 20, 2022
Economic changes in the aftermath of the COVID-19 pandemic have created challenges for companies of all sizes. Amid supply chain disruptions, inflation, and rising hiring costs, business leaders in nearly every sector have been tasked with developing creative and effective pricing strategies to remain profitable.
During Start. Run. Grow Week hosted by CO— by the U.S. Chamber of Commerce, business owners and experts joined Editor-in-Chief Jeanette Mulvey and Senior Features Editor Barbara Thau to discuss how small businesses can establish a successful pricing strategy for sustainable growth.
Building Relationships Can Help Small Businesses Weather Supply Chain Challenges
Phil Dumontet, CEO of Whole Sol Blend Bar, explained how building strong relationships with suppliers and customers has helped his business navigate challenges caused by supply chain shortages.
“We have very transparent conversations with our suppliers,” Dumontet said. “Because we have a really close relationship with those suppliers, they can really give us a sense of where the market is heading … and then we can make a decision.”
“We understand that [suppliers] are also experiencing challenges. The cost of them acquiring products is going up as well, so it’s all passing down,” he added.
Dumontet noted that communicating those challenges to customers is equally important when making pricing adjustments.
“We share price increases that are coming down the line before they occur,” he said. “Customers really do understand when you are being upfront and transparent.”
“I think it’s when things come out of left field … [that] you get into those challenges,” Dumontet concluded.
Effective Pricing Strategies Require Strong Leadership Skills
When asked how businesses can implement effective pricing strategies amid today’s economic challenges, Julie Poland, Strategic Advisor at ProActive Leadership Group, says strong leadership and communication skills set companies apart.
“Between COVID and inflation and all kinds of changes that are happening now, we have to be nimble,” said Poland. “That means a leader needs to be communicating more often. They need to be tight with their senior team because it’s an all-hands-on-deck kind of moment.”.
“At different places in the organization, people are going to see different things,” she continued. “The people that have access to that information need to be talking to one another candidly so the organization can make decisions.”
Poland advised businesses that lack this level of transparency to make improving communication a priority.
“One thing [business leaders] can do is start looking at how often they are getting together as a leadership team so that they have the intelligence that they need,” she said.
Consumer Trends Data Should Drive Pricing Decisions
Susan Lee, Commercial Strategy Leader at EY Parthenon Americas, shared insights on the current consumer landscape and underscored the need for businesses to let that data guide their pricing strategies.
“The most important thing I would tell any company, large or small, is to forget about averages,” Lee said. “You have to look at your product segments and your customer segments carefully because once you get into the data, you will see … they behave differently.”
“Looking at the average is likely going to lead to leaving money on the table,” she warned, stressing the importance of evaluating core segments independently.
Lee noted that investing in data analysis and visualization can benefit businesses of all sizes.
“It can be scary for small businesses that may not have spent so much time in the data, but … a small investment in this area can help small businesses be a lot more surgical in their pricing decisions,” she said.
From the Series