What Will Happen After Raw Material Arise All-Round

From the second half of last year to today, companies in various industries have issued similar price increases: due to the recent increase in raw material prices, operating costs have risen, and product prices have risen. Some companies increase the price of some products, while others increase the price of a full range of products. More and more companies are entering the “price increase mode.” The rise in raw materials, packaging materials, transportation costs, and staff costs, for manufacturers, any controllable or uncontrollable cause is the reason for the price increase. Dealers are always uncontrollable and can only passively accept price increases. Most companies do not save much space in raw materials, and the increase in raw material costs further reduces profits. The conventional cost increase can be digested by the enterprise as much as possible, but when the increase of some materials exceeds a zero point, it will be on the verge of affordability.

However, we need to see that the price increase of raw materials will not last for a long time, and will inevitably return to a normal range. Then, when the cost of raw materials is now rising sharply, should companies “raise them all at once.” If the company cannot fundamentally improve, and each time the cost increases, it can only be resolved by increasing the price, and it will not take long for all customers to be lost. Therefore, for the company, “one increase” is not a good strategy to solve the cost increase. . Companies can’t see other people’s price hikes, and just follow the trend to increase prices, which will inevitably cause a bad market reaction. Some companies may take advantage of this time to start selling out or under-stocking by means of price, which has caused many dealers to experience difficulties in their operations. From another aspect of things, when business people increase prices because of the increase in raw material costs, if you can keep the prices for a period of time, it is actually a kind of “price reduction” in disguise and win some orders. More small and medium-sized enterprises are the first to survive. Orders can ensure the survival of the enterprise, and then consider how to live better. This is not to say that companies should not adjust product prices in the face of increased costs, but price adjustment requires a process. It must take into account many factors such as market acceptance. It is a matter for companies to carefully consider, not a “price increase letter”. “. From the perspective of long-term operations, companies must establish a market risk response mechanism, which of course includes cost control of upstream materials. This is also the time to consider a company’s cost management capabilities. Price adjustment can only be a short-term measure. In the long run, companies need to be prepared before the next round of price increases. Through advance layout, actively reach cooperation with customers, lock long-term orders as much as possible, lock material prices with suppliers, and use measures such as scale effect, efficiency improvement, and innovation to respond. Thinking: 1. How much impact did the price increase of first-line brands bring? Is it really necessary to participate in the price increase at this time? 2. Can the price increase of the original low-priced product maintain market sales? If the product value cannot be improved in the future, will there be room for survival in the next price increase? 3. How large is the price increase of the product and how long will it last? Has the company seriously and prudently calculated the reasonable increase in material cost? 4. After the material cost stabilizes, how to adjust the price? 5. From the increasing cost of raw materials, has the company realized how to resolve this problem? 6. There will be more and more uncertain factors. Is our company’s ability to deal with these factors continuously improving? 7. How did the manufacturing company treat the dealers in this incident? Was it “one increase”? There are still a variety of corresponding measures to deal with the price increase together with dealers.

3


Post time: Jul-19-2021