Pricing in Uncertain Markets
From archives of Ian Tidswell’s website, this evergreen article explores pricing in uncertain markets and how to handle foreign exchange movements.
“The best laid plans of mice and men often go awry” said Robert Burns in 1786. And while he wasn’t to my knowledge a businessman, the saying holds true today.
When things change in commerce, pricing is one of the most effective levers we have to react quickly. Making the most of an opportunity (or minimizing a threat) is about balancing speed with sure-footedness. Here I’ll focus on unexpected foreign exchange (FX) changes, inevitable and unpredicted. Note these options apply to both positive and negative FX changes.
The Exchange Rate just moved: now what?
First, don’t just react. Instead you need to develop the options for how to act (including doing nothing), gather information and analyze it to assess and modify the options, and finally make a decision that is communicated internally and externally.
There is obviously tension between acting quickly and having fully analyzed information, so recognize that fact and lower the standards needed to make a decision. Let’s focus the first two points
Deciding what to do will require answering three questions:
How does this change our goals and market position?
What options do we have to act?
What impact are the actions likely to have short- and long-term?
Let’s work through these steps.”
Key points include:
- Actions to take
- Impact of actions
- How to prepare
Read the full article, Pricing in Uncertain Markets: Handling Foreign Exchange Movements, on EenConsulting.com.