{"id":1358,"date":"2020-05-21T12:00:00","date_gmt":"2020-05-21T12:00:00","guid":{"rendered":"https:\/\/pdisoftwareprd.wpengine.com\/?p=1358"},"modified":"2022-12-12T15:58:01","modified_gmt":"2022-12-12T15:58:01","slug":"strategies-to-price-fuel","status":"publish","type":"post","link":"https:\/\/pditechnologies.com\/blog\/strategies-to-price-fuel\/","title":{"rendered":"The Price is Right: Strategies to Price Fuel"},"content":{"rendered":"\n

You may recognize the name of the popular game show \u201cThe Price is Right\u201d where lucky contestants had to guess the prices of items on the show, with the guess closest to the actual value \u2013 without going over \u2013 won and the contestant walked off with the prize. Sounds simple, right? But estimating and selecting the price to get it just right \u2013 not too high, not too low \u2013 proved to be fairly difficult.<\/p>\n\n\n\n

This same delicate balance of determining price is what fuel and convenience retailers try to achieve each day. They aim to set the price in the \u2018sweet spot\u2019 to balance fuel volumes and margins while achieving a customer\u2019s broader objective of meeting the proper brand image along with various other factors. So, while this price setting is based on multiple components, the main factor as of late has been one thing: consumer behavior.<\/p>\n\n\n\n

Economic impacts<\/h2>\n\n\n\n

Economies around the world felt the impact of the COVID-19 pandemic as countries began to enter lockdown. With only essential businesses and activities allowed to continue, fuel consumption plummeted while consumers stayed home. As noted in the NACS and PDI Insights Cloud Consumer Behavior Monthly Reports, fuel consumption reached stagnation, leaving prices in a state of steady decline.<\/p>\n\n\n\n

As trip patterns shifted and began to trend down year-over-year, oil prices dipped below zero for the first time in recorded history. The surplus in the oil industry, supplied by Russia and Saudi Arabia, flooded the market during a time when demand was at a historic, all-time low.<\/p>\n\n\n\n

Let\u2019s be clear: no price predictions could have prepared retailers for the drastic shift in consumer behavior. Times of disruption, whether they\u2019re caused by a pandemic or inclement weather (hurricanes, fires, etc.), have always left convenience retailers with the need to revisit their strategies. That\u2019s why it\u2019s important to rely on adjusted strategies as well as your software to help you survive during the 2020 pandemic.<\/p>\n\n\n\n

No software, now what?<\/strong><\/h2>\n\n\n\n

Although fuel consumption has dropped, the price of fuel at the pump is still an important psychological factor that consumers use while choosing which site to visit. Now more than ever, fuel retailers should evaluate pricing strategies even with the lack of fuel consumption. It\u2019s more necessary than ever to put time and thought into the prices at your pumps and in your forecourt to help draw consumers to your store.<\/p>\n\n\n\n

Unfortunately, historical purchasing patterns aren\u2019t applicable during times of disruption. So, what do you do when the software and tools you would normally use to model the coveted \u2018sweet spot\u2019 for your prices are no longer viable? Here\u2019s what you can do: go back to evaluating pricing based on your knowledge of your market, consumer interests, brand reputation, and more.<\/p>\n\n\n\n

We understand the importance of always setting the right price, but know that determining the right strategy can be hard. Here are some of the ways you can help your bottom line during a time of disruption.<\/p>\n\n\n\n

Pricing strategies in an unprecedented time<\/strong><\/h2>\n\n\n\n

It can seem intimidating to evaluate new pricing strategies, especially when disruption is taking place. But these pricing strategies are here to help you through this unprecedented time.<\/p>\n\n\n\n

While there may be various pricing strategies to choose from, most can be boiled down to one of three choices: Competition-Based Pricing, Cost-Based Pricing, and Customer Value-Based Pricing.<\/p>\n\n\n\n