What Is the Best Way to Manage Price Updates When Raw Material Costs Change?
A controlled way to manage price updates when raw material costs change is to link product prices to their material content, recalculate costs when supplier prices change, review the margin impact and approve new prices before they are communicated to customers.
In Jestor, material costs, product BOMs and price lists are connected, and price changes follow an approval flow.
Why are price updates often late?
Material prices rise, but product prices stay the same for months. Margins shrink without anyone noticing.
When prices are finally updated, the change is large and customers react badly.
Different salespeople apply different prices in the meantime.
What problems does structured price management solve?
- Margins eroded by rising material costs
- Large, sudden price increases
- Inconsistent prices between salespeople
- No analysis of which products are affected
- Price changes without approval
How does an approval workflow with value limits work for price changes?
Small adjustments can be approved by the sales manager, while larger changes need the director. Each decision is recorded with the new price and effective date.
This keeps pricing consistent and controlled.
How do I manage price updates in Jestor?
- Update material costs when supplier prices change.
- Recalculate product costs from the BOM with formula fields.
- Review margin impact on a dashboard.
- Propose new prices and route them for approval by value.
- Publish approved prices with effective dates and inform customers.
| Step | Owner |
|---|---|
| Update material cost | Purchasing |
| Recalculate product cost | Automatic formula |
| Propose price | Sales manager |
| Approve | Director, by value |
Why use Jestor for price updates?
- Cost formulas: product costs follow material prices.
- Impact dashboards: affected products visible.
- Approvals with limits: the Approvals solution supports hierarchy and value thresholds.
- Price history: every change recorded with dates.
What else helps you manage price updates when raw material costs change?
- Communicating price changes early helps customers plan. Giving notice with an effective date, and explaining the cost drivers, usually leads to better acceptance than sudden increases.
- Recording when each customer was informed avoids disputes later.
- Long-term contracts may require specific notice periods, which should be checked before publishing new prices.
This is how you manage price updates when raw material costs change and protect margins.
Frequently Asked Questions
Can product costs update automatically?
Yes. Formula fields recalculate costs from material prices.
Can price changes require approval?
Yes. Approval flows can route by value; see jestor.com.
Can I see which products lost margin?
Yes. Dashboards compare current costs and prices.
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