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What is index-based pricing?

Index-based pricing can help businesses align pricing with market-based cost indices. By linking prices to market-based cost indices, businesses can protect themselves from rising input costs and pricing fluctuations.

Why do companies need index pricing?

While most companies are forced to implement Index Pricing to hedge their raw material cost volatility, not all of them have robust processes to support index exposure and still fewer precisely plan and execute Index Pricing strategy which in turn costs them millions of dollars annually.

Should a company enter into index pricing with a few customers?

We have observed that typically once a company gets into Index Pricing with one (or a few) customers for a product line, it adopts a general readiness to enter into Index based deals with all other customers for that product line, irrespective of the customers’ size or strategic value.

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