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Time For Chemicals Companies To Raise Their Pricing Game | Forbes

Compared with other industries, chemical companies are among the least confident in their pricing decisions and the least likely to raise prices regularly (see Figure 1). Until recently, this laid-back approach to pricing hasn’t hurt their financials, thanks to low prices for many raw materials.

In the years ahead, however, chemical executives will need to develop their pricing muscles again, just to hold onto margins and market share. Costs of materials, especially crude oil, are rising, as are freight rates. Uncertainty over tariff increases on petrochemicals, specialty chemicals and plastics adds to the pressure.

Improving pricing skills takes focus, but there are several practical steps any company can take to raise its pricing game. Firms that harness the formula for best-in-class pricing in chemicals greatly outperform on pricing outcomes. They consistently raise prices over time and across their customer base, expanding margins above and beyond their costs. And they are increasingly nimble in reacting to opportunities and challenges in market fluctuations, executing price changes quickly to preserve and improve yields (see Figure 2).

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Time For Chemicals Companies To Raise Their Pricing Game.