- Firms have faced a tough economic backdrop since 2020
- But they have also learnt lessons that won’t be forgotten in a hurry
For companies, pricing can be more of an art than a science. They respond to changes in costs, but do so in a fog of uncertainty: what will competitors do, and how will customers react? The perils of getting it wrong are significant – customer demand could plummet, not to mention the ‘menu costs’ of repeated price updates on price lists and tags.
According to Wharton marketing professor Z John Zhang, in normal times, “most executives don’t really spend much time” on pricing decisions at all. Instead, prices tend to be based on precedents, with the occasional adjustment thrown in. But the past few years have been very abnormal indeed.