While Netflix subscriber outlook has grabbed many headlines, Proctor & Gamble, the consumer goods giant beat expectations in Q1. P&G, which makes everything from Oral B toothbrushes to Tide detergent, saw net sales rise. How’d they do it? Pricing power. Pricing power refers to the rise in price of a company’s products while maintaining demand. Proctor & Gamble used price hikes to help offset widespread inflation and a margins crunch. P&G found price elasticities – the consumer reaction relative to their price increases – to be more favorable than earlier predicted. Given favorable reactions P&G increased prices and its revenue growth forecast a full percent for 2022. In inflationary times like these, pricing power is a factor to consider. It’s a great time to review what you own and why.
