Price Pressure | What's Your POV?

There are many price pressure points of view (POV).

In Price Pressure: Fact or Fiction?, one sales executive described how over time the protracted recession and recovery had reduced pressure. Why?

As companies streamlined and laid off, there were fewer workers at all levels. Price pressure receded as companies focused on acquiring material and parts, so they could push product out the door.

A small business owner shared another perspective.

The entire business landscape has changed, the owner explained. Many customers and competitors were hit so hard by the recession, they closed down or retired early.

The economy overall may be in recovery, but this trend has continued. The impact of these changes has been challenging, says the owner.

The good news, there’s less competition. The bad news, the company’s lost more than a few core customers. It’s streamlined operations, slashed expenses, and postponed upgrades and equipment purchases.

It’s putting more time, energy and resources into marketing and sales than at any point in its more than 20-year history. The time from initial contact to final sale is longer, and customer budgets remain tight. To compensate for this, the company has had to rely on its cash reserves, which is a concern.

Pressures shift up and down, the owner observed, but in combination, the factors prevalent in our industry make us more vulnerable to both real and perceived price issues.

So, what’s your POV? Share your perspective by voting in our simple survey (right sidebar) and adding your own price pressure stories and examples. (Survey closed May 8.)

To learn more, read our article, Is Price Pressure Affecting Your Bottom Line? at mfrtech.com and our B2B Write Now white paper, Price Pressure: Is it Hurting Your Bottom Line?

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1 comment:

Mal Bass said...

This is an excellent paper that addresses an issue that has been ongoing for my nearly 50 years of professional life.

Here is a brief overview of a situation that I just learned about recently but have seen many times in the past. The theme could be called “Beware the new buyer.”

A friend has a manufacturing company with several large customers. One customer buys a family of parts that total about $300,000 in revenue. All the parts are not the same in either volume or ease of manufacturing – the A, B, C variation.

My friend had quoted an overall package of the several parts some years prior when a previous buyer was in place. In his case an easier to make and higher volume high part provided profit that offset some lower volume and difficult to make B and C parts.

Just recently a new buyer awarded the A part to another supplier based strictly on price leaving the B and C parts with my friend. Not only has he lost the profit on the A part, but the costs to make the B and C parts will rise. He is challenging the decision and may be able to salvage some sort of compensating benefit.

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