The value of every product fluctuates over time, adjusting to market demand, availability, and other factors—and of course, this also applies to the iron and steel industry. In this context, you need to know how to adjust the price of your products.
Charging an outdated price can hurt your profitability, while charging too high a price could negatively impact your sales. Therefore, it's important to be careful when making this change.
Read this post to better understand how price adjustments work in the iron and steel sector. We'll also explain what you can do to make this process easier!
A good starting point for adjusting prices in your store is understanding the reasons behind the increase or decrease in the cost of iron and steel. Here are some of the main reasons.
Naturally, one of the main costs involved in manufacturing iron and steel parts is the materials used, especially the minerals and reagents used in the process. When these materials increase in value on the market, steel suppliers and iron have to pass the cost on to the buyer.
The factors that influence raw material costs, in turn, can vary. When there is greater demand for a material relative to supply, its market cost tends to increase. This usually happens when the extraction rate is lower or when several industries require large quantities of iron and steel.
Iron and steel are materials traded globally. Therefore, the value of these products is influenced by the current value of the US dollar.
On the one hand, exchange rate fluctuations can determine which suppliers or buyers are most attractive for negotiations. This mechanism directs the flow of raw materials and semi-finished products to certain countries, reducing their availability in other regions—and, consequently, increasing their prices.
On the other hand, in the case of sectors that import iron and steel, exchange rate appreciation has a direct impact on the purchase price, which is passed on to the selling price charged.
Every government has its own international trade policies. This impacts a range of costs, such as exchange rates, export and import tariffs, and transportation costs. Furthermore, environmental restrictions can limit the amount of raw materials extracted.
These expenses are added to the cost of iron and steel, whether as raw materials or manufactured products. When certain tax changes occur or tax incentives are revoked, the additional cost becomes part of the price.
In an iron and steel store, the main concern when it comes to price adjustments is how they will be passed on to customers. If you have regular customers, it's important to take certain precautions to avoid losing them to the competition.
Follow along and see some interesting strategies!
Transparency always comes first, right? It's this honesty that increases your chances of keeping your customers, even if you have to raise your prices.
Whenever there's a price adjustment, clearly explain the reason, whether citing external factors or a specific situation. Good customers generally recognize the need for price adjustments.
Price adjustments often impact the client's financial planning, especially in long-term projects, where new iron and steel orders must be placed after the adjustment.
The simplest solution is to offer different payment methods so the customer can reorganize and adapt to the new price. This also makes it easier for you. sales control, as you reduce your risk of losing expected sales.
Increasing a product's price is often enough to deter some customers, including those who have already purchased from your store. To avoid this, you can reintroduce the product to these customers to reinforce its unique selling points.
With this negotiation technique, you justify the price increase while highlighting the qualities of the product and its suitability to the customer's needs, favoring retention.
One common mistake is not notifying customers in advance of the price adjustment. In some cases, the change is made without any warning.
This lack of communication can be interpreted as a breach of trust between the store and the customer. Furthermore, those who don't have time to adapt tend to seek out other suppliers.
As we mentioned, price adjustments are necessary to maintain your store's profitability. However, it's not always a good idea to immediately pass this cost on to your customers.
There are cases where this price change could have such a significant impact on your sales that it would be better to accept a reduction in your profit margin than to lose customers. Alternatively, you can find ways to profit more without increasing prices to maintain its competitiveness in the market without affecting its financial health.
If you have loyal customers, you should carefully consider negotiating this adjustment. Offering favorable terms and differentiated payment conditions reduces the impact of these changes on the customer and prevents default.
It is worth emphasizing that, as you cannot leave aside the sales management and your budget, it is important that the new conditions are defined strategically, mitigating any risk of loss.
Price adjustments are part of the iron and steel trade. Therefore, companies need to have good planning to strategically communicate adjustments, as well as effective communication to maintain transparency. Don't hesitate to follow our tips for adjusting your prices while minimizing risks for both your store and your customers.
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