Aligning payments with customers’ business situations. Instead of raising prices as the recovery takes hold, which may spark customer objections and competitive responses, a company can simply reduce discounts. Nearly a decade later, many of these contracts were still in place, while overall market rates had accelerated rapidly. On some contracts, they set a “fixed rate” on all matters, with no reopener. Instead of explicitly raising prices as the recovery takes hold, which may spark customer objections and competitive responses, a company can simply reduce discounts or end promotions.ĭuring the last downturn, for example, some professional-services firms were not disciplined when providing discounts on their hourly billing.
![getting ready to sell your mac getting ready to sell your mac](https://www.imore.com/sites/imore.com/files/styles/xlarge/public/field/image/2019/11/music-authorizations-mac.jpg)
Temporary discounts or promotions can safeguard the perceived value of a company’s products and services and may be less likely to stimulate price wars, putting the company in a stronger position when the market recovers. Many companies reflexively slash list prices in a downturn, for example, but flexing discounts while holding list prices constant is often better at stimulating demand.
![getting ready to sell your mac getting ready to sell your mac](https://images.indianexpress.com/2020/04/Apple-Mac-Bloomberg-759.jpg)
How companies adjust prices and communicate the changes to customers can impact near-term performance and the prospects for a strong recovery. For example, many companies are lowering cost to serve by reducing delivery speed or frequency, or by fulfilling orders through alternate channels. Companies in many industries can find opportunities like these-including: adding terms to provide protection from volatile costs, reducing behaviors that raise costs or recoup the costs of those behaviors, or improving payment flows. For example, a few weeks into the coronavirus outbreak, several manufacturers with healthy balance sheets extended their customers’ payment terms to help them manage cash flow.
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Key actions include: Adjusting terms and conditions.įlexible terms can make customers more willing to make purchases. They preserve value while remaining flexible, and build long-term customer loyalty as a result of short-term concessions and exceptions due to COVID-19. Be creative in meeting customer needsįorward-thinking companies find more creative ways to meet customer needs than simply dropping the price. For pricing leaders, the three most important areas to focus on are: being creative in meeting customer needs while preserving value, driving strong pricing discipline, and investing boldly in capabilities for the future. Pricing is a crucial part of an organization’s rapid revenue recovery strategy. While these lessons are clear, they don’t take into account the unprecedented nature of the current public-health crisis, which is a complicating factor that needs to be considered. The most effective companies are adapting to their customers’ immediate and changing needs while they consider longer-term implications.īased on our research and experience from past economic crises, the most resilient companies put in place practices during the downturn that prepare them to succeed when the recovery comes. In many industries, radical shifts in costs, demand, and supply availability have snarled previously predictable market pricing mechanisms.