Down And Out Pricing: Navigating Volatility in The Chemical Market
Optimal efficiency is the name of the game to maximize profits in chemical manufacturing. The traditional model to load the plants and drop prices until they run at 100% is a tried method, but is it true and reliable?
Maybe, but the results are short-lived, at best, and it destroys prices across the market.
Modern companies are under increased pressure to maintain profitability and appease knowledgeable customers. Funny things happen when executives are scared of market dips or customer defections. The natural reaction is to simplify the process: volume equals revenue. Yet, once the plants are running at maximum capacity, revenue plateaus and more temporary fixes, like lay-offs, are implemented. It’s a rudimentary financial view that is outdated and no longer needs to be the default reaction.