Pricing decisions that SMEs need for strategic growth.

The price of commodities has increased dramatically in the past two years due to the pressures of COVID-19. The prices of a number of companies have increased in recent years in response to pressures to achieve higher financial returns, manage new corporate tax policies (9 percent in the UAE announced recently), and keep up with inflation (6.5% in Qatar in the past two years).


There has been a resurgence of recent price increase annoucements by CEOs of consumer product companies, luxury retailers, and even telecommunications companies. Whether it is oil prices rising by 44 percent or other commodities increasing 7.5 percent over the past six months, the price increase trend can be seen across the board.


Larger companies may be able to increase their product prices with relative ease. However, SMEs that are struggling for survival need to be aware of the trends that will likely determine their success in the future. It is imperative that they determine how much to raise prices in a way that is sustainable to the business while exploring how they can maintain sales growth without suffering due to the loss of sales.


It is important that they understand their market share. Do you have a strong position in the market? By understanding their market power, CEOs and C-Suites can determine whether they can raise prices above marginal costs without experiencing a decline in volume.

Transparency and honesty are critical.

Consumers may become loyal to a brand if they see its value. However, the strength of its value can be gauged by the extent of a company’s ethics and its ability to prove its honesty to customers. Recently, The Times published a report that found that SMEs should be honest about price increases to their customers to maintain the integrity of their brands and educate them as to why these changes are being made globally.In a market that is subject to price fluctuations as the demand exceeds supply, this can influence brand loyalty and allow you to stand out from the crowd. It might also discourage other companies from entering the market, thus protecting the brand’s own market share.


Recently, the CEOs of consumer goods companies like Mondelez, Kraft Heinz, and luxury retailers like Ralph Lauren have announced notable price increases. Some companies might get away with tactics such as reducing the number of products while maintaining the same price without losing their loyal customers. SMEs that take a transparent approach to price increases may be able to counter the anticipated decline in sales.

Manage supply chains.

Global disruptions continue to pose a challenge to manufacturers, adding to their costs and challenging their ability to adapt. In a survey of 481 SMEs, 47 percent of respondents indicated that supply chain delays forced them to increase their prices. Deloitte has discovered systemwide difficulties due to high demand, rising costs of raw materials and freight, and slow deliveries in the United States, according to Purchasing Manager reports. A higher price is likely to be passed along to the customer as supply outpaces demand. Controlling your distribution chain will also make passing along higher production costs easier.

Drive technological innovation.

Early adopters are willing to pay a premium for new products that are driven by industry-specific innovation. There’s added value in knowing products have been enhanced by the latest technology. The smaller retailers can learn from the coffee giant Starbucks, which recently announced a new strategy involving moves such as allowing customers to self-order through an app or a kiosk at the store. Use technology to solve customer pain points that can be feasibly applied when expanding the number of physical stores.

Our key to success in 2022 will be pricing. The marketplace is leveling out within this “new normal,” however, this is the time to take action to alleviate margin pressure and solidify power for the C-Suite.


A recent study conducted by Simon-Kucher & Partners examined the experiences of companies when it comes to pricing. Although 37 percent of respondents reported not having participated directly or indirectly in a pricing war, 57 percent reported that price pressure has increased over the past year. Additionally, it was reported that 68 percent of companies plan to increase prices in 2021 at least in line with inflation, which is consistent with the fact that price is undervalued as a lever of profit.


Implementing a straightforward pricing strategy will enable you to establish a clear vision for how to manage price priorities and market dynamics. This phase allows you to examine the competition and note aspects such as the promises they make to customers, the level of upgrades and product levels, as well as any claims they make to distinguish themselves. Once you have identified your value drivers, you can determine the best product prices before moving forward. When diligently implementing this framework, you can establish price governance to ensure structure and control.


A top priority for your management team should be measuring, monitoring, and communicating pricing. This task is also more straightforward than you may think. Keeping in touch with customers and competitors will help anticipate their expectations, whereas internal communications will ensure that there is no confusion and that everyone is on the same page.


Here at GL International, we are committed to improving organizational effectiveness to ensure your business succeeds. So get in touch with us today to see how we can help your business grow.