Pricing in the Chemical Industry
Boost your pricing power
60% of the chemical companies indicated that a dedicated price optimisation strategy is a ‘must have’ business initiative. And today companies are still suffering to determine the right pricing method for their solutions.
The evolution of profitability and gross margin performance of the roughly 250 existing chemical and materials companies globally over the past one and a half decade reveals a rather negative perspective and investment potential. The chemical sector responded to this evolution by cutting SG&A and R&D expenses. Regardless of the decoupling of oil and gas prices in the US (marked by the crisis of the sub primes in 2008), the chemical sector was already losing a part of its attractiveness, even before regions such as Europe and Asia were confronted with the disadvantage at the level of feedstock’s and energy cost.
As a consequence, many chemical companies are looking for opportunities to differentiate and grow organically. To support this, Deloitte has developed an approach called Advanced Materials Systems (AMS)2 which reignites growth and addresses unmet market needs. Global megatrends and their industry responses, have opened up significant opportunities to capture value in new markets through functional solutions, leveraging innovative combinations of materials, processing technologies, new business models, and partnerships. DTTL’s Global Manufacturing Industry Group’s research has shown that solution providers create more economic value overall than material suppliers. AMS helps companies capture the value they create in the market. Introducing smart ways of pricing is indispensable to bring these innovative solutions successful to the markets.