Forklift buyers need to brace for a new pricing model – dynamic pricing.

Dynamic pricing is a model that uses flexible prices instead of fixed ones. Prices vary based on changes in the market, such as competitor pricing, demand, supply, time, and customers’ behaviour.

Most consumers are already familiar with the approach which applies to air tickets, hotel rates and car hire prices. Traditionally, dynamic pricing has been used for commodities with limited lifespan – like the airline seat which can’t be sold after the flight has taken off.

As reported in Forkliftaction News, at least two major equipment manufacturers have flagged a move to dynamic pricing as a solution to volatile global markets which are facing extraordinary cost surges for components, materials and freight.

German giant KION, which manufactures and sells Linde, Still and Baoli forklifts, was among the first to introduce dynamic pricing which is now in place in all geographic markets and covers all products, according to a spokesperson.

“The past few months have shown us how volatile the raw materials market currently is, and that material, energy and logistics costs are continuing to rise. In this context, we have decided to rely on agile pricing and to adjust prices if this is necessary due to a significant cost development. To this end, we constantly monitor the raw material market as well as energy and inflation developments," Forkliftaction News was told.

KION keeps all its dealers and branches informed of the latest pricing through regular updates and the company anticipates retaining the strategy into the future.

“We will design our prices flexibly and adjust them to the prevailing market conditions,” the spokesperson explains.

In its latest financial statement, manufacturer Palfinger also flagged a shift to dynamic pricing.

Bernd Winderle, director - global sales processes and tool, tells Forkliftaction News that the model will initially be applied only in the EMEA region, but will be expanded. “As Palfinger is a global company, it makes sense to introduce this strategy to our other regions as well.”

Palfinger’s model is based on two components: the latest Palfinger price list, and the product-specific and material-specific monthly industrial Producer Price Index (PPI) EU 27 published by Eurostat. “The development of the PPI corresponds very closely to the actual cost development of Palfinger products since 2017,” Winderle explains.

“Starting on January 1, 2023, the combination of the current Palfinger price list and base index will serve as the basis for pricing. The development of the PPI indicates the respective price change up or down by the time of the final order confirmation.”

According to Winderle, dealers and customers will be able to easily check pricing as the PPI is published by Eurostat on a monthly basis.

Like KION, Palfinger is expected to stick with the model even after the market returns to stability.

“Compared to the old model, dynamic pricing comes with certain advantages. First of all, it offers full transparency to us as well as to our customers and partners. What is even as important is the fact that it mirrors the markets’ developments. If prices decline, our customers benefit immediately,” Winderle explains, adding that dynamic pricing is going to be the standard model throughout the 21st century.

Despite the advantages extolled by its adopters, dynamic pricing does not look set to become the norm for materials handling equipment suppliers.

While most manufacturers declined to answer questions from Forkliftaction News, Irish manufacturer Combilift rules out any move to dynamic pricing, with co-founder Martin McVicar stressing that his company “wants to make it easy for our customers to do business with us”. 

“It is much easier for a customer to plan ahead and budget for new equipment when they know what it’s going to cost. Of course, inflated production and build times together with supply chain issues create challenges in relation to material costs, but, as a policy, Combilift is not applying dynamic pricing, nor do we intend to adopt this for our dealers or customers,” he insists.

McVicar argues that the materials handling industry is not ideally suited for dynamic pricing for several reasons, such as budget planning and Capex approval. “In addition to this, country-specific government incentives for new product purchases do not fit well with dynamic pricing. However, the main reason that dynamic pricing is not suited for OEM of materials handling equipment is that there are potentially two customers to negotiate with - the local dealer who will of course be resistant to any erosion of their margins, and the end-user who may only have Capex for the initially quoted amount.” 

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