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CEO-BLOG

Price increases don᾿t have to be the devil᾿s work

04.08.2021
Ulrich Spranger
Ulrich Spranger
When it comes to prices, our industry has mostly known downward movement. Suddenly prices are increasing for many vendors. So what? Well, we make more turnover and the absolute margin goes up. Even vendors who (despite massively increased freight costs) are somehow still increasing their gross margin (according to the stock market report), are increasing their prices. None of our vendors who have raised prices has ever had to suffer a dip in sales as a result. So it seems that price increases are not hurting vendors. Apparently, our solutions and products bring a much higher efficiency increase in the application than they cost.

The only warning: Do not make offers now where the price between the offer and delivery is valid for longer than 30 days. That could be suicide. If an end user has a fixed roll-out plan, then buy the goods immediately, and the customer must sign and guarantee their plan. Simply reserving goods doesnít help. Projects run out, prices suddenly rise, even for orders placed in the future. This situation can be explained to customers right now Ė because every day in the press there is talk of price increases. If a project is postponed, it could become more expensive.

Letís look at it from a distributorís point of view: If a vendor raises prices, we get additionally billed for our current stock, depending on the contract.

But this situation gives you new bargaining power. It is Ľcommon senseę that prices are currently rising and that availability is suffering. If a customer tells you they need 1,000 scanners by the end of the year, they will simply have to buy them now. Otherwise, they probably will either be more expensive, or he merely wonít get them. And if a competitor grabs an order away from you because he guarantees prices for a long time Ė fine, then your competitor will soon pay on top. Itís that simple.

But donít let yourself be blackmailed, please!

On or the other end customer has taken things too far, pushed you and us up against the wall and then bought cheaper somewhere else. If he needs goods and maybe also a dealer who works together with the distributor with the highest stock, then we donít have to draw our guns and sell the goods for zero margin. Regular customers will always be helped, no matter what. But those who have always bought merely by price may now have to pay a realistic price. And pay for the value of the stock and a good relationship.

To this day, no vendor has ever intervened in existing project prices. But please pay attention to how long your projects are limited until they must be renewed. In the last 20 years it has not happened that the prices rise in the middle of a project renewal, but it can happen now. So please be careful to submit your offers in such a way that you have certainty.
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