Many executive teams think inflation price elasticities are symmetric. They assume a 5% price increase triggers the same sales drop as a 5% discount triggers a surge. Our extensive empirical corporate research proves this is incorrect.
The Nature of Hidden Friction
In B2B business structures, switching costs, supply integration contracts, and simple corporate habit create highly resistant boundaries. When prices shift, customers don't always move immediately. This creates a critical delay that smart pricing managers can leverage to maintain margins during periods of supply inflation.
Strategic Implications
- Maximize leverage by staggering price updates with contract renewal terms.
- Watch for competitor stock levels before adjusting core portfolio prices.
- Bundle complex technical services to reduce direct price comparison risks.
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