Retail Price Strategies

Navigating Pricing Strategies

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Lowest Cost

  • Requires high use of variable pricing (market-following).
  • Highest price uncertainty; price risk depends upon pricing selected.
  • Immediately affected by market changes (down or up).

Cost (Budget) Certainty

  • Requires use of fixed pricing at all times.
  • Highest price certainty; lowest price risk.
  • Affected by periodic market changes.

Protection Against Major Price Movements

  • Requires use of fixed pricing most of the time.
  • Requires contracting at opportunistic times.
  • Requires use of long-term contracting.
  • Driven by periodic market changes.

Cost Certainty With Low Cost

  • Same as Cost Certainty except.
  • Market changes drive the timing of contracting.
  • Contract terms may vary in length.

Usage Flexibility With Cost Certainty

  • Requires use of a blend of fixed and variable pricing.
  • Market changes drive the timing of contracting.
  • Contract terms may vary in length.