Change in costs and change in competitor pricing are the two signals that automotive aftermarket companies should adjust their pricing, according to an expert.
While some companies may review their pricing structures once a year, that may not be feasible anymore, according to Adam Brody, director at aftersales strategy and insights firm Carlisle & Co.
Thanks primarily to inflation, costs for suppliers are rising. That means more regular oversight of what you’re charging, he said during the webinar Managing Pricing In A Complex Multi-Channel Sales Environment, as part of the Automotive Aftermarket Suppliers Association’s Supply Chain Webinar Series.
A question was posed by an attendee around reacting more frequently to price increases. This is a common question Brody has fielded recently, thanks to inflation.
“It’s fairly complex, of course,” he said in regards to the answer to that question. “There’s no one size fits all answer. But there are two data points I’d point you towards to help you understand this. And that is, one, changes in costs; and two, changes in competitor price.”
He wouldn’t advise going out and picking an arbitrary date and say you’ll raise prices 5 per cent after that.
“What you need to do is analyze, per pricing segment, what’s happening with costs,” Brody said. “How much are costs increasing? And how much pricing action do I need to take just to keep up with the market or maintain margins?”
Then, perhaps most importantly, have a look at the market. What changes are taking place? How are competitors adjusting their prices? And what is an appropriate reaction to the competition’s behaviour? This is something that needs to be done far more regularly these days.
Simply put, Brody added, a once annual effort to get competitive data before repricing just doesn’t cut it anymore.
“You need more frequent price research because companies are reacting so much more quickly and out of the normal cadence in today’s economy that once-annual pricing research doesn’t always work,” he said.