Do you operate in a price-sensitive category? Stupid question. Almost every business is affected by rapidly escalating prices in the value chain (If yours isn’t, thank God and consider how to strengthen your position). Harvard Business School’s John Quelch offers tips for coping with inflation and sticker shock, which we humbly embellish.

• Understand Your Customers. Are they likely to downgrade their purchases? Buy less frequently? Restrict purchases to a preset ceiling? Shop around? Grin and bear it? Hint: Watch their overall behavior for clues about how they may deal with your company.
• Invest in Market Research — by which professor Quelch means, check your assumptions. Assuming your projections are based on something, reexamine your inputs in the knowledge that your customers are in the same boat. Drive any adjustments through a grid that accounts for both margin and market share. A short-sighted change in pricing can take away as much as it costs.
• Redefine Value. In some categories, cash-strapped customers may care more about bottom line costs than incremental efficiencies. For example, Quelch thinks soft-drink purchasers who are short on cash will “go for the 99 cent soft drink rather than the $1.29 container with 50 percent more volume.” Does that describe your customers’ behavior or do you sell the sort of small indulgences for which people may pay the going rate or a little more even when they’re crunched? Either way, spend some energy on defining your value in terms your customers will embrace.
• Use Promotions. Cutting prices cross the boards is a blunt instrument. Quelch: “For cash poor consumers, these promotions should hit the key price points on small pack sizes. For cash rich consumers, encourage multiunit purchases ahead of the inevitable next price increase.”
• Unbundle. Does your business lend itself to
  a la carte pricing? Think hard about how you approach that — the more you break down your pricing, the easier it is to unintentionally reveal trade secrets.
• Monitor Trade Terms — by which Quelch means, more or less: Don’t become your customers’ lending institution. Do you see a slowdown in timely receivables? That may be a ripple effect that you’ll need to factor into your projections. If you have reason to believe it’s opportunistic stalling, consider what it might cost in good will to insist your customers not make money at your expense.
• Increase Relevance. Show your customers how your product or service enhances their lives. Are there ways you can add additional value to raise customers’ emotional stake in your relationship?

A sequence of ancient proverbs reads:

Honest scales and balances are from the LORD;
all the weights in the bag are of his making.
Kings detest wrongdoing,
for a throne is established through righteousness.
Kings take pleasure in honest lips;
they value a man who speaks the truth.
A king’s wrath is a messenger of death,
but a wise man will appease it.
When a king’s face brightens, it means life;
his favor is like a rain cloud in spring.
Proverbs 16:11-15, New International Version

Beginning from the premise that honest scales and balances and all the weights in the bag originate with God, read these proverbs again with two filters:

1. How would read these proverbs if you were king and your business your kingdom?
2. How would your read these proverbs if your customer were king and your business part of his kingdom?