S4E4 – The New Pricing Reality: Speed, Scale & Tariffs

For two decades, pricing teams have been built around the power of 1%: find one or two points of price, drop it to the bottom line, and watch the EBITDA multiple follow. Now some governments are effectively setting pricing strategy themselves, with tariffs of 15% to 50% landing overnight. A listener prompt raised the question: what happens to pricing teams that were never built to move this fast or this big?

Key takeaways

• Tariffs are not a new type of cost pressure, but the speed and scale of change are unlike anything most pricing teams were designed for.
• Many companies are waiting out tariffs as a temporary event, but structural costs rarely leave the system once they are built in.
• The right response to a tariff depends on what you sell, how much of your cost it affects, and what the market and competitors will bear.
• Pricing cadence is shifting from annual to semi-annual to monthly, which requires the right process, people, and tools.
• Much of today’s pricing variability already happens through discounts, and discount and list pricing strategies are likely to converge.

Governments are now moving prices faster than pricing teams

The traditional pricing team was built to find incremental gains. Teams worked through analysis, aligned the sales team, briefed executives, and planned for lost accounts. The process was deliberate because the changes were small.

Tariffs have changed that. Price changes of 15% to 50% can appear overnight on entire product categories. Avy compares it to taking a Ford Fusion and putting it on a Formula 1 track: the question is whether the vehicle was built for what is coming at it.

Michael’s view is that the motion itself is not new. Unless a company is fully integrated, it has never fully controlled its own costs. Input costs, labor, and supplier pricing have always moved. What has changed is the pace. A manufacturer used to forecast input cost changes with a long lead time and prepare customers well in advance. Now the analysis has to happen, and a point of view has to form, much faster.

Is this temporary?

Many businesses treated COVID as a short-term disruption, then found themselves dealing with it for two to three years. Some companies are approaching tariffs the same way, expecting conditions to return to normal under a future administration and trying to weather the storm until then.

Avy is skeptical. Once a cost increase is built into the system and someone is earning more because of it, that structural cost is very hard to remove. No one wants to give it back.

Michael adds an important point about how tariffs work. The importer pays the tariff, not the foreign supplier. If tariffs were removed, importers might not reduce prices all the way, but market pushback would likely force them to return some of that price to stay competitive.

What should an importer do after a 50% tariff?

There is no single answer. The response depends on the role the tariffed item plays in what you sell. If it is a small input whose cost doubled from $0.10 to $0.20 inside a larger product, the impact on final price is very different than if it is the product itself.

From there, the questions become practical:

• How much of the increase can the market bear?
• What are competitors doing?
• How long can you afford to wait while the analysis is done?
• What lead time do customers need before a price change?

For some businesses, this is an existential question. A company earning a 30% margin that drops to 15% may be deciding whether it can stay in business. Others have chosen to absorb the tariffs and position themselves as strategic partners to their customers. That may not be the optimal strategy, but it is one many businesses have taken.

Pricing cadence is getting faster

COVID was version 1.0 of this shift. Many large businesses that took one annual price increase moved to two per year, and had to figure out how to run the process faster and leaner.

Avy and Michael both spent years in the beer business, where pricing decisions were made every week. The file arrived at 9:00 a.m. and new prices were due by 4:00 p.m. When that process started, it was messy. Over time, it became routine.

That is the direction more pricing is heading. A manufacturer that updated prices once a year may move to monthly updates. Doing that efficiently requires the right process, people, and tools, because there is no longer time for weeks of analysis and customer conversations before every change. It will also change the customer relationship itself, including contract terms and how much flexibility is built in.

Commodity-style pricing is spreading

Some industries already work this way. Poultry and other protein companies price in response to fast-moving markets, and commodity exchanges trade hog futures by the minute. These businesses have the analytics and processes in place to move at that speed.

Michael expects more industries to adopt a version of this dynamic, commodity-type pricing. It may not be hourly, but it will be faster and based on both input cost and value.

The hidden version: discounts

Avy points out that much of this variability already exists today. It just shows up as discounts rather than list price changes. In most industries, discount structures are not truly rules-based, which creates a shotgun pattern of price dispersion.

Many companies have spent significant time managing price through discounts, but much less time on list pricing strategy. Over the next decade, those two areas are likely to converge.

What companies should learn from the episode

A pricing function ready for this environment should be able to answer a few practical questions:

1. How quickly can we move from a cost change to a pricing point of view?
2. Which products and customers can absorb an increase, and which cannot?
3. Do our contracts and customer terms allow for more frequent price changes?
4. Are discounts governed by clear rules, or driving uncontrolled price dispersion?
5. Do we have the process, people, and tools to price monthly instead of annually?

This is where Revenue Management Labs takes a customized, hands-on approach. AI can help speed up the analysis across products, customers, competitors, and costs, but it does not replace pricing judgment. The approach needs to reflect the company’s data, industry dynamics, team capabilities, and specific margin levers.

Just as important, recommendations need to reach the people managing prices every day. A pricing strategy only creates lasting value when teams understand it, can use it, and can measure whether it is working.

The bottom line

Governments are not pricing better than pricing teams. They are simply moving at a speed and scale that most pricing teams were never designed for. That is a warning sign. Whether or not current tariffs last, the shift toward faster, more frequent pricing decisions is already underway, and companies that build the capability now will be better positioned for whatever comes next.

What this means for your pricing capability

The episode’s conclusion tracks with how RML structures its own work: a pricing capability that lasts is built from three connected pieces, not one clever model.

• Advise: Clear pricing direction grounded in evidence and research.
• Build: AI-powered pricing tools tailored to your business.
• Change: Execution and capability that makes pricing stick.

Faster pricing cycles put pressure on all three. Direction has to form quicker, tools have to handle more frequent updates, and teams have to execute changes without the long runway they once had.

Catch all episodes for The Pricing Guys

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