Fluctuating market values directly impact international companies’ margins. Use these exchange rate risk management pricing strategies to turn the tide in your favor. Read the full post here: https://thekinigroup.com/exchange-rate-risk-management-in-pricing/

1. How to Manage Exchange
Rate Risk in Pricing
insights from

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Exchange rates have a huge
impact on your pricing strategy.
As rates shift, prices either
become more profitable or not
profitable at all.

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This requires a HUGE strategy shift as
markets become more turbulent.
For example, the Euro has lost almost
25% of its value against the US dollar,
creating enormous risk and
opportunity for many companies.

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Need some inspiration for
your next strategy shift?
Here are two ways to manage
exchange rates in a way that doesn’t
negatively impact margins.

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1. Establish a Price
Fluctuation Framework
with Customers

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Constantly renegotiating deals is
exhausting, and neither side
leaves happy.

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Instead of updating terms when exchange
rates change, work with customers to
build a framework to address exchange
rate fluctuations.

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A simple framework:
Keep prices the same as long as the exchange
rate does not change by more than 10%.
Automatically recalibrate prices to split the
difference between new and old prices when
the price does move by more than 10%.

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Have your analysts research worst
and best-case scenarios and ensure
the terms work for both parties.
Make sure you cover your bases and
close all potential loopholes!

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Put everything on paper in terms
customers understand, with concrete
examples and market-relevant terms.

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2. Create Value by
Assuming the
Lion’s Share of the
Short-Term Risk

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Absorb more risk, but make
sure your customers are
willing to pay a premium for it.

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Lay out clear expectations for both
parties to ensure customers honor
their side of the equation.

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Strategy Success Tip #1:
Manage Internal Expectations

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Make sure your staff understands
the strategies’ terms and goals.

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Strategy Success Tip #2:
Regularly Measure Price Performance

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We recommend isolating
your data points
(exchange rates, volume, customer
segments, etc.)
to see the true impact of your
strategy on your profits.
Measure regularly!

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Strategy Success Tip #3:
Keep a Close Eye on Exchange Rates

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Closely monitor exchange rates to
enhance trend assumptions and
predictions.
Make incremental improvements to
increase profits over time.

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KiniMetrix helps companies leverage
their sales transaction to build
profitable pricing strategies.
Click here to see how KiniMetrix
can do this for you.
Start turning exchange rate fluctuations
into a positive impact on margins.