Do your prices need to match inflation?

When discussing inflation, increases in the price of goods sold (COGS), and raising prices of your products, there isn’t a silver bullet that every company should use. This is a complex conversation that can be more nuanced than just saying “yes” or “no” to raising prices. There’s a myriad of market factors to consider.

Here are some things to consider when making this call for your business: How elastic is the demand for your products? Can you find ways to lower your COGS? Did your COGS actually grow as much as other markets did?

We wanted to provide some context for how things are changing and some insights to help make the decision process a little easier on you. These stats come from what we have seen some of our clients doing in the first half of 2022.

  • We saw a pretty significant range when it came to Price and COGS increases:
    • Price changes had a wider range: 13% to as low as 4% vs. COGS increases: 10% to a low of 6%
    • For our sampled customers, the average Price Increase was around 8% vs. COGS Increases of 8.3%
  • We began to see COGS increases in Q4 of 2021 into Q1 of 2022, and most Price Increases were implemented within 1-3 months
  • The biggest takeaway is there have been no material velocity changes post price increases, leading us to believe their current market is inelastic to the changes in the first 3-6 months

If you would like more information about how your business is doing and some help making sense of the data, you can book a demo with our Business Intelligence Team to have a look at our Reporting Solutions.