Pricing should not be overlooked when planning for Brexit, says Feargal McCormack.
Prices affect profitability. Most successful business owners understand this and many have mastered the art of pricing. However, in uncertain times such as we are experiencing at present, it is difficult to predict where markets are heading. Consequently, it is important to review your pricing strategy, taking into consideration what a hard Brexit might mean for your business.
In carrying out this review, the aim is to understand how your customers, your costs, your profit target and your competitors will be impacted by Brexit so that you can devise an appropriate pricing strategy that will ensure the long term profitability and sustainability of your business.
Remember that tax and regulatory considerations should also form part of your review as changes in these areas could have a significant cost impact on your business.
Once you decide on your strategy, you’ll need to put appropriate procedures in place to ensure that it will be effectively implemented. Questions to ask in this regard might include whether your discount policies are consistently applied and whether they support your overall pricing strategy. Another area to look at is the training that you provide for the employees who produce and sell your products and services. This needs to be carefully aligned to your overall strategy.
Technology plays an increasingly important role in most businesses today and valuable information may be available from your accounting systems, particularly if you have implemented real time accounting. For example, an analysis of past transactions can help you understand the factors that impact profitability.
Generally, it is advisable to price strategically rather than opportunistically. In a competitive environment, it’s important to avoid a ‘race to the bottom’. Keep in mind that businesses which do not generate a profit are unlikely to survive for long.
Finally, remember that FPM provides specialist support through our Brexit Centre of Excellence and that InterTradeIreland funding is available for manufacturing and internationally tradable service businesses who wish to avail of this service. The support is in the form of a £2k voucher (inclusive of VAT) which qualifying businesses can use to meet the costs of obtaining Brexit-related advice. The cost of this advice is invoiced directly to InterTradeIreland so there is zero cashflow impact on applicant businesses. Contact us for details.
Feargal McCormack l Managing Director