Compared with other industries, chemical companies have underdeveloped pricing capabilities. They are less confident in their pricing decisions and less likely to raise prices regularly. Chemical companies can improve pricing capabilities by understanding the customer’s business better and the role of their products in it, so they can price according to value rather than on a cost-plus basis. Most will also need to become more nimble, so they can respond to market fluctuations and opportunities with dynamic pricing. Many chemical companies will also need to revise their sales incentives, to encourage profitable deals rather than rewarding mere volume sales.

Focusing on value, dynamic pricing and proper sales incentives can help companies preserve margins.

Source : Bain - David Burns and David Schottland