The Inflation Imperative

Inflation—the worst inflation in 40 years—complicates profitability and revenue generation. In short, inflation confounds every aspect of pricing. Readers need another pricing book because very few professionals working today have muscle memory of what pricing in conditions of high inflation demands. The last time inflation was this high was in 1982. How many business leaders and pricing professionals have experience that goes back to the early 1980s? Vanishingly few. It's at this point we realized that despite inflation, business leaders and pricing professionals need resources to help them increase profitability and revenue. Business leaders need resources to help them evolve their organizations to optimize profitability and revenue considering inflation and supply chain instability. The authors of Pricing with Confidence accept that we can be part of the solution because over the past three decades, our clients have assured us that we have been true partners in helping them achieve profitable revenue in all pricing conditions.

We became convinced that an inflation edition of Pricing with Confidence could help pricing professionals move beyond the noise of that moment and begin working on things over which they actually have control and that this would contribute to the overall success of their respective firms. We've seen many professionals become bogged down in the details of fancy tactics and technologies and miss the simple truths of what needs to be done.

While inflation complicates every aspect of the pricing process, a key theme of Pricing With Confidence: Second Edition is that it's possible for readers to focus on controlling what they can as inflation rises and the economy rises and falls right alongside it. This edition of the book represents nothing less than a master class on pricing leadership through inflationary times. A key lesson is that pricing leaders must decide: sacrifice margins by absorbing the impacts of inflation or refocus their business model. Every variable in the business model—pricing, inventories, adjusting the product line, separating unprofitable customers, narrowing your customer base, and selecting your customers far more carefully—must be considered in the glaring light of inflation.

The authors of the second edition resonated with the reality that this generation of working pricing professionals has no direct experience working in the context of inflation and dramatic supply chain disruptions. Our book, we are convinced, will offer pricing leaders a roadmap for overseeing a paradigm shift in the organizations' business models. Such a shift conditions the psychology and motivation of every pricing leader to respond quickly to the challenges of inflation.

Because inflation is such a volatile force, the book argues that it's imperative for leaders to make pricing decisions sooner and better. Such decisions (e.g., shrinking the workforce or exiting cash‐inefficient businesses) are wrenching in the best of times. There is little time for equivocation with rising inflation. The optimum response to inflation may be to shrink a firm's size to make them more focused and efficient. This act, while seemingly counterintuitive, can actually grow revenue and profits. The very analytics and metrics that leaders previously relied on—think margins, cash flow, gross revenue growth, and market share gain—will likely have to be reprioritized.

Our bottom line is that we knew we could help people like you manage pricing better. This inflation edition of Pricing with Confidence cuts through the misconceptions of pricing in inflationary times to deliver the proven truths that help make companies nimble enough in their pricing disciplines to generate incremental uplift. This second edition anticipates that there will be various business “shocks” along the way. Of course, readers of the second edition will find practical responses to those events. Our main goal is for this edition of Pricing with Confidence to provide you with the tools and resources required to build an organization that executes well in the face of so much volatility. So, here goes. Hope you enjoy the ride.