In what I believe to be an industry first, Brisant, makers of the highly successful Ultion door cylinder, have announced that they are to reduce their prices by 2.5% due to the slight recovery in Sterling.
In recent weeks the value of Sterling against the Dollar has risen steadily. A few weeks ago it hit a low of $1.21 to the pound. But after solid economic news and volatility sparked by Donald Trump’s election last week, the value of the pound has seen somewhat of a recovery. It was nudging the $1.27 level after Trump’s victory, falling back a cent or two in recent days.
Not too long ago I wrote a post exploring the idea of companies who raised prices due to Brexit and the fall in Sterling would ever bring them back down. You can read that post here. In the end, I came to the conclusion that companies wouldn’t. Turns out I was wrong.
The Brisant email
This is what I, and many others, will have had in our inboxes on Monday:
We recently announced the introduction of a currency differentiator with a promise that when the exchange rate reached certain triggers we would decrease your prices accordingly.
The first trigger point was achieved last week, so the price on orders placed from today have automatically been reduced by 2.5%.
For absolute transparency we have added a page to the Brisant website that shows the current band in real time.
They even gave us a handy little price ticker:
I’ve also looked at the price differentiator page they set up on their website. It’s simple, but does the job it was set up for, to keep things open and honest.
So far, Brisant I believe is the first business in our industry that has reduced prices due to the small recovery in Sterling. This is a bigger deal than some might think.
Honest policy to put pressure on the rest
There have been a lot of companies who have raised prices in recent months. Pretty much all have blamed Brexit and the drop in value of Sterling versus the euro and dollar. There remains some skepticism as to the level of truth in some of the price rises. Regardless, Brexit is the blame, whether we like it or not.
The problem with this, is that because Brexit has been so publicly advertised as the reason for the increases, when Sterling recovers some of it’s value, installers will be quite rightly looking to their suppliers to adjust prices accordingly. As I mentioned above, I believe most won’t, and will look to hold on to increased profits for as long as possible. This will irk installers to a high degree.
Brisant however have embarked on an honesty policy. They are the first business to implement an open and transparent pricing arrangement that shows clearly and obviously how their prices are affected by the rises and falls in the value of Sterling. In fact, I think this might be the very first instance of any company in the history of our sector to implement a policy like this. Something I applaud loudly and commend. We live in an age where people want more transparency and information, and Brisant are fulfilling that by implementing this open pricing policy.
I can also guarantee that MDs of other companies, especially those who have raised prices recently and blamed Brexit, will be feeling very uncomfortable about this. Angry even. By doing this, Brisant have got the jump on everyone incredibly early, and will now put immense pressure on many other companies. Installers will have enjoyed reading their Brisant email on Monday. But they will now be looking to their other suppliers to see what actions they will take. Although Sterling has a way to go before recovering to pre-EU vote levels, but it has risen a bit, and if Brisant can already pass that difference on to their customer, installers will be asking why can’t the others?
The question now is how will the rest of the industry respond? Will they look to follow the path Brisant have taken and be much more reactive and transparent when it comes to pricing. Or will they hold firm? If Sterling continues on a steady path to $1.30 or even higher in the coming weeks and months, that pressure might become too vocal to handle. Brisant will have ruffled feathers with this, but publicly nothing will be said against them by their competition. For fabricators and installers they have done the principled thing, and any criticism of this move will not be backed up by any part of the industry.
An open policy does also leave room for price to go up if Sterling drops back again. So whilst many will welcome this 2.5% drop in prices, everyone should take note that a transparent policy means that prices will rise and fall with much more frequency. Something I actually think is a good thing. Perhaps businesses could manage their profit margins a bit more efficiently if pricing became more responsive and reactive.
Brisant’s position on Brexit and price rises has also been clear from the start. Although price pressures will increase on suppliers, if everyone started raising prices all over the place then there could be a seriously detrimental effect on the public. Price pain has to be managed in the knowledge that in the medium to long term things will get back to normal. Causing short term pain now could cause longer term damage to our industry if we choose not to look at the bigger picture.
So how will the rest of the industry respond? Kudos to Brisant for having the guts to come out and do this now.
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