Price Escalation: What Should Retailers and Brands Do?
While scaling a business the amount of new knowledge and business characteristics, you have to pay attention to inevitably increases. One of these factors is rising prices. Price increases mean that a product may have a different price in different markets.
Usually, price increases are called inflation, but we will consider this term as an economic business concept for a single niche, and not the entire market as a whole, as with inflation.
The global goal of raising prices is to enable the product to enter a new market/country. At the same time, the cost of the product may vary depending on the trading environment. Therefore, it is important to prepare for such changes in advance and take into account additional business costs for transportation, delivery and storage, as well as various import/export tariffs.
When working internationally, you need to think about working with different currencies, take into account exchange rate fluctuations in your pricing strategy, consult on taxation and legal aspects. It is especially important to pay attention to pricing on a geographical basis. You can learn more about this issue in our article International Pricing Factors.
Consider the most popular ways to solve price escalation problems:
The first and perhaps the easiest option might be to sell locally, in your city/country. This is an easy and familiar way of doing business, but not necessarily the best. With this option, you need to weigh the pros and cons, if such a local business brings you sufficient income, comfort and benefit, then this may be the best option for you. But if you see that this decision limits your possibilities, and on the way to develop the only obstacle is your fear, then you need to prepare for an important step, think through the details and conquer new heights.
Another good option might be to look for free trade zones. It's a great way to start selling internationally without the added cost. To prepare for selling in a free trade zone, be sure to consult with a lawyer on how to draw up international contracts. Before entering such a market, conduct research on the supply and demand of your product in these countries to find out if it is worth entering this level of trade.
An additional option to avoid the risks of rising prices is to use special contracts. For working internationally, it is important to include a price increase clause in the contract to protect yourself from possible risks beyond your control, for example, an increase in the price of raw materials, additional goods, taxes, or commissions. With this item, you guarantee yourself protection from any hidden costs.
A key option for dealing with price escalation is continuous price monitoring. It is always important to know the mood of the market, the competitiveness of the pricing policy, while you need to understand what goal you are pursuing and, taking into account internal and external factors, choose the pricing strategy you need. The Z-Price service will be an excellent assistant in automatically monitoring competitors' prices.
In conclusion, I would like to say that international business is a large-scale project that requires great attention to detail and the need to think through every step in advance. With careful planning and a reasonable approach, you will be provided with a high income and a large number of satisfied customers.