Price Increase (Price Setting)

Price Increase strategy is used to (periodically) increase price over time – the increase factor is applied to the old price to get a new increased price.

Calculation

The Price Increase strategy is calculated in this way:

where:

• Base Price – Actual Price

  • Can be found in the price list/grid in the field Actual Price.

  • Is stored either in a price list / price grid or Product Extension table.

  • Actual Price is part of the Core PSP module (see PSP Actual Price Element).

• Price Increase – Can be either percentage or absolute value.

  • The Increase is stored in a Company Parameter tables “Price Increase” per Pricing Level and defined for a combination of Product Segments (see also Price Increase Lookup).

• Price

  • Can be found in the price list/grid in the field Final Price.

Use Case Examples

The Price Increase strategy, involving periodic adjustments to prices over time through either percentage-based or absolute value increases, is a common approach across various industries. This strategy is often used to address inflation, cost of production increases, market demand changes, or to reflect the added value of product improvements. Here are several common use cases for a Price Increase pricing strategy:

• Consumer Goods and Retail – Retailers and manufacturers of consumer goods frequently adjust their prices to reflect changes in production costs, such as raw materials and labor, or to keep up with inflation. For example, during periods of high inflation, businesses will periodically increase prices to maintain their profit margins.

• Automotive – Car manufacturers may increase the prices of new vehicles annually or with new model releases to reflect advancements in technology, safety features, and to cover increased costs of materials and labor.

• Inflation-driven price increase – Finally, you may want to increase prices based on inflation rates. In this case, you can use a custom pricing strategy that takes the inflation rate into consideration. You'll need to calculate the new price based on the current price and the inflation rate. The new price can then be passed on to the consumer to cover the additional costs due to inflation.