6 Quick Pricing Wins to Manage Tariffs
Tariffs can create significant cost pressures for businesses, forcing companies to rethink pricing strategies, supply chains, and customer relationships. While long-term solutions like supplier diversification take time, businesses can implement quick pricing wins to mitigate the immediate impact of tariffs.
Here are six quick pricing strategies to help you stay competitive and protect your margins:
1. Implement Surcharge Pricing for Tariff-Affected Goods
The idea of temporary surcharges gained popularity during COVID-19 when businesses faced unprecedented supply chain disruptions and cost volatility. Airlines, logistics companies, and manufacturers introduced fuel surcharges, supply chain fees, and even “pandemic fees” to offset sudden spikes in costs.
The key takeaway? Customers largely accepted these surcharges when communicated transparently as a necessary, short-term adjustment rather than a permanent price hike.
Businesses can apply this same approach to tariff-related costs. Instead of increasing base prices across the board, a clearly defined surcharge for affected products can maintain price stability while ensuring cost recovery. Labeling it as a “Tariff Adjustment Fee” or “Import Cost Recovery Surcharge” helps signal that it’s a temporary measure tied to external economic factors rather than an arbitrary price increase.
How can you implement this strategy? Companies should ensure these surcharges are visible but justified—including a proactive explanation in customer communications and on your website so as not to surprise customers at checkout. This approach works particularly well in B2B settings, where customers are used to line-item charges.
2. Use AI-Driven Pricing for Real-Time Adjustments
Pricing in B2B markets is often structured around two key models—negotiated pricing and list pricing. While negotiated business allows for more flexibility in pricing adjustments, list pricing has traditionally been more static, with less frequent updates. However, in volatile markets where tariffs continue to shift global trade dynamics, businesses must ensure that list pricing strategies remain agile enough to prevent margin erosion while maintaining competitiveness.
AI-driven pricing tools enable businesses to dynamically adjust both negotiated and list prices in response to real-time cost fluctuations, demand shifts, and market conditions. For negotiated pricing, AI can help determine optimal price points that balance customer relationships and margin protection. For list pricing, AI can introduce greater responsiveness to tariff-driven cost changes, ensuring that static price updates happen at the right frequency and with the right strategic impact. By analyzing willingness-to-pay, cost changes, and competitor movements, AI-driven pricing ensures that businesses can proactively protect profitability without overcorrecting or underpricing.
The key takeaway? During tariffs and times of extreme volatility, companies that rely on manual cost-plus pricing, will have a difficult time keeping up. Rigid price increases may not align with customer expectations or market conditions. Instead, dynamic pricing models ensure businesses pass on costs selectively, protecting high-demand products from unnecessary price hikes while adjusting lower-priority items more aggressively. AI can also identify customer segments that are less price-sensitive, allowing targeted increases rather than broad adjustments.
How can you implement this strategy? Begin by integrating a dynamic pricing tool that utilizes AI to consider cost fluctuations, customer demand, and other market indicators. Instead of applying blanket increases, adjust prices based on product demand and margin sensitivity, ensuring that high-value customers see minimal disruption. Continuously monitor performance and refine pricing strategies to stay agile as tariffs evolve. Specific and tailored pricing analytics are critical to ensuring you are making the right pricing decisions within an organization. Mix/Rate analytics and profitability waterfalls can highlight revenue and margin leakage or opportunities across the company, or all the way down to a specific customer or SKU in seconds. This is critical in today’s fast-paced and dynamic market.
3. Bundle Products to Offset Tariff Costs
Bundling is an effective way to distribute tariff-related costs across multiple products, reducing sticker shock on high-tariff items. By pairing affected goods with higher-margin or locally sourced products, businesses can soften the perceived impact of price increases while maintaining overall profitability.
For this to work, companies should focus on value-driven bundling—where the package offers clear benefits beyond just price. This could mean bundling a tariff-heavy item with accessories, extended warranties, or subscription-based services. The key is to make the bundle appealing enough that customers focus on the overall value rather than the individual price of the impacted product.
The key takeaway? Customers respond well to value and options. In this environment, everyone knows that cost pressures are here to stay. Across the supply chain, companies are having to make changes. Trust and transparency remain key to providing and driving customer loyalty. The more value your customers perceive they are getting, the more likely they are to continue to trust your brand and the more likely they are to repurchase.
How can you implement this strategy? Identify high-margin or complementary products that can be bundled with tariff-impacted goods. Design bundles that offer a clear customer benefit—such as added convenience, savings, or exclusivity. Promote the perceived value of the bundle rather than focusing on individual price components, and test different package combinations to find the most effective pricing strategy.
4. Introduce Tiered Pricing & Substitutes
Another strategy to consider is providing customers flexible pricing options to help mitigate the impact of tariffs. If high-tariff products are a core part of your business, offering lower-cost alternatives can keep price-sensitive buyers engaged while maintaining premium pricing for those willing to pay more. Buyers appreciate having choices and may trade up or down based on perceived value.
One approach is to introduce "Good, Better, Best" pricing tiers, where tariff-heavy products sit in the premium category, and alternative (possibly locally sourced) options are positioned at lower price points. This prevents customers from feeling trapped by higher prices while still offering a premium option for those who value it.
These types of “branded” packages have been highly successful in the airline industry, which use branded fares to give customers pricing flexibility, allowing them to choose between basic, standard, and premium fare options. When external cost factors—such as fuel prices—increase operational costs, airlines often adjust fare benefits rather than applying blanket price hikes. For example, an airline may keep its lowest “Basic Economy” fare unchanged while increasing the price of higher-tier fares, where customers expect more flexibility and perks. This strategy helps protect demand from price-sensitive travelers while still capturing revenue from premium customers willing to pay more.
This is another area where AI pricing will help to ensure pricing parity across products and channels. As one set of SKUs gets impacted, you want to be alerted by that SKUs price change to all of its related products. This will ensure pricing parity to minimize further margin erosion or cherry picking.
The key takeaway? Offering multiple pricing tiers and product substitutes helps retain customers across different price sensitivities while ensuring cost increases are absorbed where they are least disruptive.
How can you implement this strategy? Start by identifying tariff-affected products and researching alternative suppliers or lower-cost options. Develop a tiered pricing strategy that clearly differentiates product quality and value. Ensure sales teams are trained to position these alternatives effectively and educate customers on the benefits of each option to encourage informed purchasing decisions. If operating in a service-based industry, consider unbundling features or offering a range of service levels to accommodate different budget constraints.
5. Leverage Currency & Contract Adjustments
Tariff costs don’t operate in a vacuum—they interact with currency exchange rates, supplier contracts, and global trade agreements. Businesses that proactively manage these factors can often offset tariff increases before they impact end-user pricing.
For example, companies importing from markets with stronger local currencies may benefit from negotiating prices in different currencies or securing long-term pricing agreements with suppliers. Some businesses also hedge against currency fluctuations to stabilize import costs, reducing the need for sudden price hikes.
Some companies may also be able to take advantage of buying groups and utilize collective buying power to better negotiate prices and rates.
The key takeaway? Tariffs aren’t the only factor influencing total landed costs—foreign exchange rates, supplier contracts, and pricing agreements all play a role. Businesses that actively monitor and strategically adjust pricing based on currency fluctuations or contract terms can reduce financial strain and maintain competitive pricing without eroding margins.
How can you implement this strategy? Review supplier agreements to identify opportunities for long-term pricing stability or currency-based adjustments. Consider working with finance teams to implement hedging strategies that protect against foreign exchange fluctuations. See if you can create partner strategies to utilize the power of a buying group. Stay updated on global trade policies to proactively adjust procurement strategies and minimize tariff-related costs as much as possible.
Further, incorporating currency exchange rates into your AI pricing tool will ensure price changes are proactively managed in real time, eliminating the impact of negative currency rate changes to your margin.
Offer Rebates or Incentives to Soften Price Increases
When direct price increases are unavoidable, rebates or purchase incentives can help offset the customer’s perceived cost impact. Offering discounts on future purchases, volume-based rebates, or loyalty rewards allows businesses to maintain necessary price adjustments while still giving customers a financial benefit.
Rebates are particularly effective in B2B transactions, where companies often budget based on total spend rather than individual product prices. By structuring a rebate program tied to purchase volume or contract commitments, businesses can encourage bulk purchases while mitigating the immediate sting of tariff-driven price increases.
In B2C settings, loyalty-based incentives—such as rewards points, store credits, or exclusive discounts on future purchases—can help retain customers despite higher prices. Rather than simply absorbing the cost of tariffs, this approach allows businesses to turn pricing challenges into customer retention opportunities.
The key takeaway? Rebates and incentives create a win-win scenario—customers feel they’re getting added value despite price increases, while businesses protect revenue and encourage larger or repeat purchases. This approach not only softens the psychological impact of tariff-driven cost hikes but also strengthens customer loyalty, keeping competitors at bay.
How can you implement this strategy? Analyze your customer base to determine which segments are most affected by tariff-related price increases. Design a rebate structure that incentivizes long-term purchasing without eroding profitability. For B2B businesses, consider volume-based rebates tied to annual spend, while for B2C, loyalty programs or targeted discounts can encourage repeat purchases. Clearly communicate the benefit of the rebate or incentive at the time of purchase to ensure customers perceive added value despite the price adjustment.
Final Thoughts
Tariffs will always create challenges, but businesses that adapt quickly and communicate transparently can maintain profitability. Start by evaluating if any of these six quick wins can help you manage pricing effectively, and ensure your customers understand the value behind the changes.
Coming soon, we’ll discuss best practices for communicating price changes transparently.
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