Volatile costs of raw materials often result in frequent heated price negotiations between suppliers and customers. To hedge this raw material cost volatility, companies are compelled to explore implementing Index Pricing Strategy. Index Pricing Strategy utilizes a market or raw material index (or cluster of indices) to calculate and regularly update prices.

Index Based Pricing assists the suppliers protect margins in volatile conditions, minimizes annoying negotiations, and offers a transparent pricing mechanism. It helps suppliers protect their margins in volatile conditions, minimizes annoying negotiations, and offers a transparent pricing mechanism.

Index Pricing Strategy has its own set of challenges and intricacies. Not many firms have the expertise to accurately account for indices and calculate pricing formulas. Companies adopt different approaches to execute Index Pricing. Typically, they either fail to effectively analyze the strategy, or seldom revisit it after execution, and end up adding complexity to their pricing processes and losing millions in margin erosions.

This deck enables organizations to gain a deeper understanding of the Index Pricing Strategy and its efficient execution, by providing a detailed account of the:

1. Types of Index Pricing Strategies
2. Index Pricing Formulas
3. Implementation Challenges Involved
4. Index Based Pricing Best Practices
5. 3-Phase Index Based Pricing Approach

The slide deck also includes some slide templates for you to use in your own business presentations.

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