Consumers are going to low-price stores more and buying less per visit. They’re opting more frequently for generics over name brands, per Jefferies analyst Corey Tarlowe. Justin Sullivan/Getty Images
By: Kirk Jackisch, President, Iris Pricing Solutions
Now that 2025 is underway, pricing leaders are navigating an increasingly complex landscape. Inflationary pressures may have eased, but the lingering effects of price increase fatigue, high interest rates, and unpredictable geopolitical factors have created a perfect storm of challenges. For senior leaders, this year demands agility, strategic foresight, and a renewed focus on innovation.
Below, we outline the critical trends shaping pricing strategies in 2025 and key considerations to keep your organization ahead of the curve.
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The Era of Surgical Price Increases
Gone are the days of broad, across-the-board price hikes. Customers, both businesses and consumers, have faced years of relentless increases driven by inflation, supply chain disruptions, and rising costs. This cumulative strain has left many customers scrutinizing every dollar, making broad price increases untenable. Leaders must instead adopt surgical pricing strategies, focusing on areas where price increases are both justifiable and value-driven.
Key questions to consider:
- Have you identified differentiated products or segments where your value proposition allows for targeted price increases?
- How can you optimize cost-to-serve to offset resistance and preserve margins?
By carefully aligning pricing decisions with customer value and cost realities, leaders can navigate resistance without sacrificing profitability.
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The Multivariate Challenge
Pricing decisions in 2025 are being influenced by a web of interconnected factors: persistent cost pressures, soft demand, high interest rates, and potential tariffs. This multivariate environment makes scenario planning both critical and challenging. Many organizations are freezing decision-making because of the overwhelming number of variables—a strategy that is no longer sustainable.
Strategic insight:
Instead of aiming for perfect forecasts, adopt layered scenario planning. Develop “if-then” frameworks that allow for flexible adjustments throughout the year. For instance:
- What minimum actions must be taken now to address rising costs?
- Under what conditions would you implement a second price increase mid-year?
Proactive planning can prevent paralysis and ensure your pricing strategy remains competitive despite uncertainty.
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Innovation as the Growth Engine
In a market where demand is soft and traditional price increases are met with resistance, innovation is the key to unlocking better growth. This includes not only developing new products and revenue streams but also leveraging technology, particularly AI, to drive efficiency and create value.
Opportunities to explore:
- AI for Revenue Growth: Use AI to create high-value solutions that justify premium pricing. For example, AI-driven synthetic customer models can accelerate market testing and unlock faster go-to-market strategies.
- AI for Cost Efficiency: While cost-out initiatives through AI can improve margins, leaders should balance these with strategies that generate incremental revenue rather than solely reducing costs.
Critical thinking point:
Is your organization using AI to its full potential? Consider whether your investments in AI are driving innovation or simply improving operational efficiency. The former has far greater potential for long-term growth.
(See Pricing and AI Whitepaper)
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Overlooked Opportunities in Post-Sales and Loyalty
Many companies overlook the strategic potential of post-sales support and customer loyalty initiatives. These areas, often treated as afterthoughts, represent untapped revenue streams.
- B2B Example: Optimize pricing for warranties, maintenance, and parts to turn these into strategic assets rather than auxiliary services.
- B2C Example: Build deeper customer loyalty through data-driven programs that increase purchase frequency and share of wallet, following models like Amazon Prime.
Thought to ponder:
Are you treating post-sales support as a core revenue driver or simply as “gravy”? Shifting your perspective could unlock significant new opportunities.
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Addressing Price Increase Fatigue
Customer resistance to price increases remains a significant hurdle. Years of inflationary price adjustments have strained trust, with customers questioning whether costs align with value. Businesses face heightened scrutiny to justify every dollar of increase.
Actionable strategies:
- Clearly articulate the reasons behind price changes, linking them to value delivery or cost increases.
- Use tiered pricing or “good-better-best” models to give customers options and reduce resistance.
Critical question:
How well are you communicating the value of your products or services relative to their cost? A strong narrative can make all the difference in overcoming resistance.
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The Role of Geopolitics and Tariffs
Tariffs and other geopolitical factors remain wild cards in 2025. Following the 2024 U.S. election, potential shifts in trade policies have created uncertainty across global markets. The binary nature of tariffs—either implemented or not—compounds the difficulty of planning.
For a deeper dive into how tariffs could impact pricing strategies this year, see our article, 2025 Pricing Playbook: Is Your Strategy Ready for Tariff Volatility? Read more.
Preparation tips:
- Factor potential tariffs into scenario planning, modeling both direct and indirect impacts on your supply chain.
- Assess how geopolitical changes may create new opportunities for reshoring or localized production, and adjust pricing strategies accordingly.
By building flexibility into pricing plans, organizations can stay agile amid rapidly changing global conditions.
Taking Action in 2025
The pricing landscape in 2025 is defined by its complexity, but with the right strategies, it also presents immense opportunities. Surgical pricing, innovation, and strategic planning are no longer optional—they are essential.
At Iris Pricing Solutions, we specialize in helping companies navigate these challenges with confidence. Whether you need to refine your pricing strategies, unlock new revenue streams, or leverage AI for growth, our team of experts are here to help. Let’s start a conversation about how we can make 2025 your most profitable year yet.
Contact us today to schedule a consultation.
