Protecting Revenue During Inflation_Blog

3 Tips for Protecting Revenue During Inflation

The legendary Ohio State Football player Wes Fesler once said, “Resilience is the ability to attack while running away.” In today’s economic environment, sometimes this feels all too true. With markets fluctuating and inflation running higher than it has since the Carter Administration, brands can feel like they are getting chased from every angle. Planning during times like this can feel like you’re being chased by a 225 pound linebacker with no front blocker. Luckily, there are tools to help you map out your path through the fog of inflation and protect your revenue. 

Consumers and businesses alike are feeling the strain of inflation. For nearly two years now, inflation has been wreaking havoc on the digital shelf, causing prices to surge in most categories. According to the Adobe Digital Price Index, in February, year-over-year online prices rose by a record high of 3.6% (the previous record was from November 2021). Apparel saw the largest increase with a staggering 16.7% change in prices YoY.

Inflation has driven many brands and retailers to increase prices in order to protect profitability. But others have opted to maintain prices to retain customer loyalty. Increase prices too sharply, and you could offset your gains by driving too many customers to a lower-priced competitor. 

Either strategy is a viable approach to protecting revenue during these tumultuous times, especially as consumer behavior shifts in reaction to inflation. Consumers are generally willing to pay more right now, but they’re also more price-conscious in some categories, such as grocery. The key for brands is to ensure that you’re the one driving the decisions about how to protect your revenue.

Here are three tips for protecting revenue during inflation.

1. Set (or adjust) your minimum advertised price (MAP)

Left to their own devices, your sellers will make their own decisions about how to react to inflation. And they’re going to be a lot more concerned about protecting their revenue than the impact on your brand. Most retailers are raising their prices beyond inflation right now, but you should be in charge of establishing the minimum advertised price (MAP) to ensure the price point always protects your profits.

Without a clear pricing policy, you’ll wind up with inconsistent pricing—and some sellers will go dangerously low for your margins. Significant price differences also make it harder for consumers to identify your authentic products or understand how much they’re really worth. They’ll be less willing to pay higher prices if they’ve seen your products for lower. (This is price erosion.)

Anytime you’re creating or changing your pricing policy, be sure that you work with an antitrust lawyer to ensure you don’t create legal problems down the road.

2. Establish steeper consequences for pricing policy violations

As inflation continues to run wild, sellers will feel more pressure to look out for their own best interests—leading some to focus on the short-term wins they can achieve by undercutting prices. Pricing violations are always a challenge in ecommerce, but they will remain an even bigger problem while inflation remains so high and the digital shelf is so volatile. And that means your policy needs steeper penalties if you want to protect your revenue.

You may want to be less generous with the number of strikes you’ll allow before freezing someone’s ability to sell your products or even terminating the relationship. Again, be sure to work with an antitrust lawyer so that your penalties align with your goals.

While your sellers may be panicking about how inflation is hurting their profits, you want them to see that the short-term gains of having the lowest price will actually hurt them in the long run—because they’ll be damaging their relationship with you.

3. Enforce your pricing policy

Without enforcement, a pricing policy is meaningless. Even with clear penalties for violations, you have to actually respond to those violations, or sellers will learn that they can ignore the policy and take advantage of your leniency. MAP enforcement is critical to protecting your revenue because it stops the domino effect of pricing wars and reduces the likelihood that they’ll occur in the future.

The challenge, of course, is that you can’t manually watch every seller who carries your products, and they can even schedule pricing violations to last just a few hours. And that’s where PriceSpider’s MAP monitoring software comes in.

Monitor your prices with Prowl

Prowl is the most advanced MAP monitoring software available. It crawls every site your SKUs appear on, comparing prices to your pricing policies. When it detects a pricing policy violation, it takes a screenshot of the violation and notifies you. You can automatically send MAP violation letters or build and customize templated messages.

Since Prowl crawls everywhere your products appear, it can track both authorized and unauthorized sellers, helping you find new sellers you’d like to partner with or those you need to eliminate.

MAP enforcement is impossible without price monitoring. And price monitoring is impossible at scale without tools like Prowl. Be equipped to attack while running, and find your way through this challenging economic time with best in class MAP Monitoring Software. 

Want to see how Prowl can help you protect your revenue?
Talk to an expert today.

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