For many of us who are trying to navigate the uncertainty of President Trump's tariff regime, the past few months have felt like Snap-on CEO Nick Pinchuk is riding Disney's Space Mountain, as he will remember this spring. You are in the darkness and are twitching at 100 mph. You feel a little nauseated and wonder when your ride will end. You believe that things are ok in the end – oh god! – But you'll do anything to end with the Caribbean Pirates.
So, do what you can to control what you can control and reach for two primary levers: cost and pricing. A May survey of 300 US CEOs placed with Alixpartners found that 68% of polls either raised prices or were considering a rise. Not surprising: 67% say the vendor has already raised prices.
But getting this right doesn't just escalate to cost. The winners of this new landscape are those who use it as an opportunity, act decisively, understand true pricing power, and grow to build systematic agility as conditions evolve.
To help, we turned to Adam Echter. Adam Echter has become the go-to guy for many CEOs, CFOs and boards who struggled with Covid-19, inflation and current tariffs in his work at price consultant Simon-Kucher & Partners. His view: If you are struggling with management, you can understand. Tariffs, by their nature, are different from what you experienced with inflation. That's because they create a “wedge” in your economics, and third parties are basically dealing with 10-20% or more action reductions in your transactions. This results in a double attack on profits. The cost per unit increases and volume decreases simultaneously.
“That's why it's really that externally impacting the profits of a company, as it's not just the economics of the unit, but also the loss of volume,” he says.
We asked him what his pricing strategy, what the company is doing, what's right and wrong, and what he thinks about his best play next year. It's simple, he says: use this crisis as a reason to build a pricing system that will strengthen your business for the next few years.
How to get started (or reboot)
Before making the pricing move, Echter suggests asking three basic questions: And even if you've already started making changes, these are still worth asking.
1.How elastic is the product demand? Echter jokes that few companies have products that are completely inelastic against tariffs, but you're probably not one of them. With SKU at the SKU level, it is important to understand how customers absorb price increases and what it means for loss of volume. The 2022-2023 inflation spike proves that many companies have more pricing power than they imagined, with 15-20% far better than expected.
2.How do tariffs reshape a competitive situation? Tariffs not only add costs, but also redraw the boundaries of competition. Some domestic companies gain pricing power as foreign competitors face higher costs. Others will find themselves competing with unexpected new market participants from countries redirecting products from high tax markets.
3. Can your organization perform pricing changes with accuracy and speed?Companies with fragmented pricing liability scattered across multiple features have a hard time adapting when tariffs introduce cost volatility. Those with strong pricing capabilities can respond strategically rather than reactively.
Segment the response
The impact of tariffs is not evenly distributed, nor is its pricing strategies. A one-size-fits-all approach risks eroding both volume and margin. Large companies segment their pricing strategies by product category, customer archetype and price tier.
Premium and brand-driven products enjoy more pricing power as loyal consumers accept a modest increase in perceived quality. Conversely, if prices rise sharply, commoditized products are vulnerable to demand losses. For these items, consider alternative tactics such as value pack formats, tiered pricing, and selective promotions.
Customer segmentation is equally important. Low-income consumers tend to be more sensitive to even small price increases, while B2B buyers may be more tolerant, but require more transparency. Understanding how different customer segments behave under pressure allows for a calibration pricing movement that protects revenues without compromising brand equity.
The recently proposed pricing move for Tonka Trucks (the beloved little metal toy) is beneficial, says Echter. The company proposed to handle a 10% tariff on a $30 product with a price increase of $5-10. It doesn't seem to be a total of math. If you are thinking only from the cost side. But they were also thinking about how to make up for the spinning rounds of volume. With the most popular and highly-demand products on the market, you could lose customers, but those who continue to buy will be more than covering hits in the margins.
Build a scenario-based playbook
Given the unpredictability of policy changes, pricing agility is no longer an option. This is a competitive ability. Companies building price playbooks have distinct benefits when clarity emerges. These playbooks should include well-defined pricing action corridors (+15-25%) linked to pre-modelled scenarios regarding demand resilience, competitor responses, and margin impacts. For example, if tariffs hit a major product line, what is the impact of the amount of a 20% price increase and a 20% price increase? What happens when a competitor absorbs costs instead?
Building these scenarios reduces decision delays and ensures overall function matching. Pricing, sales, supply chains and finance teams work from a shared framework that balances margin defense and customer retention.
Implement effective pricing tools
Many companies lack the infrastructure to implement pricing changes quickly and effectively. Two important features stand out.
Additional charges in place of basic price adjustment: Additional charges tied to specific cost drivers provide flexibility without the need for a constant readjustment of the core pricing structure. As Echter explains, “If you are constantly trying to update your date price with all the different tariffs and changes that are occurring and moving, it will be incredibly difficult and will confuse everyone.”
A better approach: Maintain a stable base pricing while itemizing tariff surcharges on your invoices. This provides transparency while maintaining pricing agility. It is also an invaluable tool that you can use at your disposal for future challenges and opportunities.
Profitability Diagnosis: Before taking pricing actions, businesses need to understand where they are most exposed. This means performing detailed diagnostics to identify changes in customer and product profitability in various post-engineering scenarios. Surface hidden fault lines can have the greatest impact on pricing movements.
Effectively communicate price changes
When raising prices according to customs duties, how you incorporate the frame is important. Customers may resist price hikes, but they are more likely to embrace them when they understand the factors driving change. Adjustments relating to clearly valid reasons are far more defensible than what appears to be arbitrary.
Strong communication regarding pricing decisions can help reduce resistance and maintain relationships with customers. This is especially important in B2B contexts where transparency builds trust even when prices need to rise.
CEO's order: Act now
The biggest mistake CEOs make in this environment is taking a “wait and see” approach. Companies that delayed their pricing actions during the inflation spikes have faced serious disadvantages as costs continue to climb.
“You now have the opportunity to make an impact by responding to your top line,” advises Echter. “This does not mean rushing and inappropriate moves. It means developing a comprehensive pricing strategy that protects profitability in positioning your company for success as the tariff situation evolves.”
The tariff challenges will not disappear anytime soon. But for CEOs who approach it strategically, it offers an opportunity to reassess their pricing capabilities, build organizational capabilities, and strengthen market positions in the long term. The question isn't whether you should act, but how quickly and strategically you can move to turn this challenge into a competitive advantage.
“We create some fast actions, monitor what's going on, move quickly, but what's more elegant is to dismantle our product portfolio and say, “Where do we add value? How does value change? This is the muscles that companies can benefit from building constantly.”
