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A price increase that held

A product line had quietly absorbed rising costs for eight years. One pricing decision, and one letter, put $200K+ back on the bottom line.

The situation

A large manufacturer's imported product line looked healthy on the surface. Underneath, a handful of products were losing money. Some were worth keeping: low-margin items that brought shoppers to higher-margin ones. Others were just dragging down the portfolio. The line had absorbed rising ingredient costs for more than eight years without passing any of it on.

The work

  • Sorted the losers. Separated the products that earned their place by building baskets from the ones that only cost money.
  • Set a margin target and priced to it. Raised prices on a few products, timed to a shift in the economy when buyers expected increases.
  • Defended the increase. When the economy settled and the retail buyer asked for the old prices back, wrote a letter showing eight years of absorbed costs and shrinking margin. The buyer kept the new prices.
Results
Profit$200K+In profit, per finance-reported actuals
Pricing heldNo rollbackThe higher prices held after the buyer asked for the old ones
Next step

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