Opinion – HVACR Profitability and Pricing are under pressure for the balance of 2023

On the many recent calls I have been on with distributors it is clear that Price will be under pressure from your end customers for the balance of 2023. It’s time to revamp your profit playbook for the back half of 2023 with some old and new tactics.

The price increase tide of 2020 through early 2023 seems to have crested. The tide as they say appears to be going out, and the climbing supplier prices appear to be receding. PVC prices, steel and cooper all are stabilizing and in the potential decline stage. That old saying of a rising tide raising all boats is true, but it’s also true when the tide goes out. In 2023 it’s time to get ready potential choppy waters.

There are some key differences to a normal B2B Distribution down cycle. Lead times and backlogs are still in the months and years range for some products, so the old playbook of just riding the storm out would be unwise. The distribution rules have changed and you need to add some new wrinkles to your old playbook to drive profits and take share in 2023.

If you experience some slowing sales the standard distributor playbook you have been running for slowdowns will put you further behind when the inevitable economic outlook improves.

That is why I recommend time to update your profitability playbook by learning from other manufacturers and distributors. I would recommend you sign-up for the upcoming Modern Distribution Management Profitability Summit in July (see video below)


Our profitability summit will be packed with case studies, best practices, and presentations from speakers, distributors, and manufacturers that will deliver actionable playbooks and programs that you can implement in your business to help make 2023 as profitable as possible.

The sessions will be filled with real world tactics and strategies you can use to maintain margins in a tough demand situation-

MDM Profitability Session – Just one of 8 Sessions!

How to Build End-to-End Channel Partnerships that Deliver Profits to Your Business in 2023.

The past three years of high demand, supply chain issues and inflation have made sales and gross margin growth relatively easy to attain for the channel.

In this session we will present and examine the latest pricing and profitability trends from in our exclusive research from Baird-MDM and MDM Analytics-University of Colorado partnerships. We will share best practices for manufacturers and distributors to consider for finding the right pricing and profitability balance for their business in 2023 and beyond.

What you will receive:

  • Baird-MDM pricing trends and analysis: Since 2011, Baird and MDM have produced this leading industry survey and report for the channel.
  • University of Colorado-MDM Analytics 2023 Wholesale Trade Economic Forecast update: Since 2010, MDM and the University of Colorado have released this valuable snapshot of distribution market trends and its outlook.
  • MDM and Dorn Profitability playbook, written by some of the top B2B Distribution practitioners in the channel.

Find out how your profitability plan for cost-side, sell-side and program-side programs stack up with that of your industry peers. Learn how to develop simple playbooks and programs that can help both distributors and manufacturers do more with less while making sales smarter, faster and easier.

This is just one of the 8 sessions that will deliver margin that profitability strategies and tactics that you can take back to your business.

It’s time to help your team try to learn from the best distributors and manufacturers in the business, and see how others find better first cost positions, improve their inventory management, and find ways to stay competitive and take orders off the street. It’s a SKU-by-SKU street battle to help your profitability team find ways to help the sales team during a time where the pressure to go lower will be high.

Your sales team may become desperate to get that slowing sales funnel moving with orders. Winning profitably is going to take a combination of strategic pricing moves that we will feature at the MDM Profitability Summit.

As always, we would love to get your feedback, so please feel free to comment below or reach out to me at john.gunderson@dorngroup.com

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