It wasn’t that long ago that anything to do with pricing was secret. How and why prices were set, margins, etc., seemed almost bound by an oath of omerta. Anybody who knew anything wasn’t talking.
That started to change for public companies thanks to the ever increasing number of financial reporting regulations. Nowadays, unless it’s privately held, you can comb through quarterly and annual reports and see how much they made before and after taxes, what the average margins were and can even do some rough volumes if you know what you’re looking for. Just about all of the data is there.
One segment of the process remained somewhat shadowy, however – price increases. Price increases have always been something that nobody liked to talk about. They were viewed, not surprisingly, as bad news. It was hard, no matter how justified, not to feel a little bad for your customer who after all, is already buying something from you. Plus there is always the fear that any price increase could give a competitor a foot in the door. “They raised your prices? In this market? Boy, they really don’t care much about you, do they?”
Yet over the last couple of years, that last bastion of confidentially is also going by the boards. Nowadays, companies are putting out press releases (!) announcing that because of this or that, the price for their particular product was about to go up.
Recently, filter giant Donaldson issued a statement that it was implementing “targeted price increases” for some of its industrial air filtration products in April and would do the same for some engine filtration and exhaust products later in the year. The company stated that “the specific price increases will vary and are dependent on the specific types and quantities of raw material content in each product line. These price increases are a direct result of the significant increase in costs of steel and all petrochemical based purchased materials.”
Even more recently, Yokohama Tire, a significant supplier of tires announced it will implement a price increase of up to 10% on all of its off-the-road (OTR) tires in the U.S., effective May 1. There will be in-line adjustments, as well, which will be announced at a later date. The price hike, the company said, was because of the rising costs of raw materials such as natural rubber, along with higher transportation and manufacturing costs.
Now of course nobody likes paying higher prices for anything. But if there is one truism in the world, it’s the one that says you get what you pay for. Today’s engines, equipment and vehicles are arguably the best ever in terms of quality, efficiency and reliability. There’s a cost to that. And if you want to maintain that level, sometimes the cost goes up.
