3 Clever Alternatives to Handle Inflation

Inflation woke the initiative in every business for lowering, highly increasing, or low-cost margin levels and prices. Alongside the quality and quantity of the sold goods and service also tends to go down the line, which is not good at all. The escape button here lies in the numerous information, business analytics, and statistics which can be more than helpful for owners learning how to properly deal with the challenges ahead. 

Here we are going to explore the three main alternatives like price changes or adding new products, upgrading or changing your portfolio, and also repositioning your brand. 

Some statistics coming right from the U.S Federal Reserve state that this not-so-dear inflation may last a lot longer than you think. So the question would be how to cope with the situation in the long term.

Usually, the prime response would be choosing one of the three alternatives mentioned in the intro of this article, which is plain as choices. By raising your prices there is a great chance that you’ll make your investors and your buyers very mad. This means you can lose your suppliers and a big amount of your clients. So the trick is learning how not to become engaged in this type of situation, instead of cutting everything off and disappointing everybody you should strive for smarter and beneficial solutions for everyone. 

This kind of tactic is an older version of the way managers use to handle inflation periods in the past. The difference is that they didn’t have the statistics that your businesses have access to today, making their decisions very shortsighted. By using the multiple tools that are offered today, gathering and comparing all the data available, you could pop up with better and more productive solutions for resolving inflation matters. 

 

Stop Supercharging Your Clients 

Highlighting the charge+ option should be replaced with two simple questions: how and why you should be charging your customers? 

This way you can only become more beneficial as a company for all of your clients and employees. Supercharging could only make you lose your customers and slow down your business, and that is not the option you’re looking for. 

Let’s look at the three practical options that could make your business more stable and fruitful.

 

Option # 1 Update Your Portfolio

The first thing a company needs to do is to offer or add new products to the menu of services or products. This is how new value propositions are created and pinpoint the goods that your buyers tend to buy the most. 

Depending on the production capacity of the company, there is another alternative like adding high-end products that will make the existing line have economic sense. 

Common mistake managers do is they tend to focus on how the consumers will react to the price changes, forgetting the two crucial things like quality and quantity. People like to buy good products, which come in a satisfying amount.

When it comes to quality, if a certain product has features that your clients could not use at all, you can decide to remove it from your offer. When quantity is related you can boost your product with more features and slightly increase the price. 

 

Option # 2 Shift the Brand 

One of the bright sides of inflation is that managers can test if they valued their products correctly. This means, there are always two options, either you overpriced your service or you underpriced it. By experiencing the changes in your income from a specific product you can make the right decision on your next move. 

When you place a new product on the market and you immediately overpriced it you must come to terms that you’ve made a mistake. Luckily this can be fixed by reducing marketing outlay and lowering the price so that you make a more pragmatic positioning. 

Another case scenario is when you’ve underpriced a product that needs to cost more and simultaneously is highly appreciated by your clientele. Running your business at lower prices gives you an advantage over your competitors, and also it gives you the space to charge more for the products that have been underestimated when it comes to the price range.  

 

Option # 3 Change Your Pricing

Quite amused by the implementation of the “my-product-as-a-service” model and subscription feature and the result that they provide, companies are easily persuaded to use a new price model. This gives them the chance to escape the older inflation solution model, like overly increased prices and high cuts in the margins.

Whether you are in the health care industry, education, or software this price model gives good results, and in the end, it can even make your business even more profitable. Instead of a price increase, you can change the way you charge your customers.

By using these tactics you can: 

• Shift your customer’s focus to lower prices 

Instead of immediately putting a purchasing price, when you charge your clients per month or mile, you get a transparent and easily manageable price setting for your customers. 

• Exclude the option of dismissing customers

If you want to keep your customers, instead of reaching and squeezing their wallets, to fill your own, there is a much smarter thing that you can do. This includes enabling easy access, outcome-based price models, and consumption by which you give them chance to consume your products. 

Doing the opposite, by setting restrictions with higher prices you’ll just end up losing them, which can drown your business deep in the lake of sadness and no greens. 

• Keep your investors happy 

Using new price models can leave an impact on the upfront revenue, luckily they will make up later with their recurring revenue per customer’s lifetime value. Investors are highly aware of this fact and that’s why they feel comfortable with implementing new price models. 

New price models should represent a strategic decision, moreover than just an instant tactical retaliation. 

A great example of a company that uses subscription as a new pricing model is Adobe. Their great strategy and awesome approach towards earning higher revenue and making their clients spend more money on their product were simply made by giving them the chance for buying their software through a subscription.

Simple as it sounds, you subscribe, and they sell you software access and boom, their market capitalization went sky-rocketing from $22.5 billion to $204.9 billion by 2022. 

 

Summary: With all the data and analytics available today, there isn’t a legit reason why you wouldn’t want to recreate a new strategy that will fit your business model and will only boost your income. If you are doubting and you’re not prepared to implement a new price model you can always mix the old and the new one and see what performs better.