Webinar Recap – Simple Numbers: Pricing Strategy and Inflation Management
Published On: March 23, 20222.2 min read
Speaker, author, entrepreneur, and financial expert, Greg Crabtree led an Align coach webinar discussing pricing strategy and inflation management and highlighting techniques for managing market changes from a business perspective.
Firstly, an unmet need is the beginning of a great business. Greg says that to be successful in business, you must get this right. Before you do anything, you must identify and understand what the market needs, and then find a way to fulfill that need profitably.
Everything we knew about business structure has changed since the dawn of the pandemic, and businesses have adapted to a new way of running things. Now more than ever, employees have the upper hand when it comes to holding their own. Good workers are hard to find; especially now with so many U.S. employees leaving the workforce, corporations are left understaffed and unable to deliver the same level of execution and results as pre-pandemic times. Business leaders have started to be more lenient in their hiring process as qualified applicants have become scarce.
Determining a reasonable price for a product or service is especially crucial in our present day. Some will make the mistake of using cost buildup as a factor in determining price, when price should be determined by the amount that the market is willing to pay. Greg emphasizes that cost should always be based on the conditions of the market, not the product itself. He further reminds us that inflation is inevitable as the laws of supply and demand are not dead. Unless lockdowns or price controls present a threat, prices will increase as long as demand exceeds supply.
According to Greg, the “labor winners” who will be successful are those who are comfortable lowering their standards for workers’ skillset, and are able to rapidly develop task specific training to get all employees performing at the level they need to be. Companies with strong culture and fair pay policies will prevail.
The “labor losers” are those that do not commit to properly training their lower cost labor, relying on bottom-end wages and government programs. Companies with long-term pricing agreements that do not allow room for labor increases will face problems due to their inflexibility in an evolving market.
Greg wraps up his presentation by outlining the most common pricing errors that businesses make that lead to profit loss, and offers some of his best techniques for getting it right.