How Do Fluctuating Costs Affect Pricing Strategies?
Fluctuating costs can have a significant impact on a company’s pricing strategy. Businesses need to balance the need to remain competitive with the necessity to cover costs. Strategies to address this include:
1. Dynamic Pricing: Adjusting prices based on current market conditions and cost structures. 2. Cost-Plus Pricing: Adding a markup to the cost of goods sold to ensure all costs are covered and a profit margin is achieved. 3. Value-Based Pricing: Setting prices based on the perceived value to the customer rather than solely on costs.