Over the past five years, consumer prices have risen by 20 per cent—and they’re not coming down. Inflation has fundamentally changed pricing forever, and businesses—big and small—must adapt or fall behind. Many assume that because inflation has slowed, prices will eventually fall back to pre-inflation levels. That’s not happening. Prices are staying high, and businesses need to accept that the rules of pricing have changed.

 

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Challenges in Pricing During Inflation

 

Large corporations, such as supermarket chains and global electronics retailers, often base pricing decisions on historical data. They look at past inflation cycles and expect things to normalise. But the past isn’t a reliable guide any more. The cost of goods, wages, and services has permanently shifted. 

 

A multinational manufacturing company, for example, may assume raw material costs will eventually decline, leading them to hold off on price adjustments. But with supply chain disruptions and persistent wage growth, waiting for a price drop is a losing game.

 

Capability Building Programmes For Pricing & Sales Teams!

 

The Cost-Plus Pricing Trap

 

A national retail chain once relied on steady, predictable costs. For years, they used a simple cost-plus pricing model—marking up goods at a fixed percentage over cost. But then, inflation surged. Supplier prices skyrocketed, logistics costs fluctuated wildly, and wage pressures increased. Suddenly, their old pricing strategy didn’t work anymore. If they raised prices too high, customers would leave. If they absorbed costs, their margins would disappear. 

 

Now, consider a major airline struggling with fluctuating fuel costs. If they stick to a cost-plus model, every fuel price surge forces them to either absorb costs or pass them directly to consumers. Instead of blindly applying a fixed margin, they need dynamic pricing—adjusting fares based on demand, competitor actions, and customer willingness to pay. Traditional cost-plus pricing is no longer enough in today’s high-cost economy.

 

Importance Value-Based Pricing during Inflation 💰 Podcast Ep. 98!

 

How to Adjust Your Pricing Strategy for Inflation 

 

1. Shift to Value-Based Pricing

 

Big brands like Apple and luxury car manufacturers understand this well. They don’t price based on cost alone—they price based on what customers are willing to pay for perceived value. Businesses across industries must now do the same. Whether it’s a high-end fashion retailer or a global software provider, the key is justifying price points through brand strength, quality, and differentiation.

 

2. Optimise Operational Costs

 

A global fast-food chain facing rising ingredient costs doesn’t just hike prices—the company also refine operations. They negotiate better supplier contracts, adjust portion sizes, and introduce premium menu items that command higher margins. Businesses should focus on efficiency before resorting to price hikes.

 

 

3. Monitor Market Conditions Constantly

 

A multinational tech company launching a new smartphone doesn’t set a price and forget it. They track supply chain disruptions and consumer sentiment. Businesses must adopt a similar approach—continuously reviewing prices, adapting to demand shifts, and staying agile.

 

4. Strengthen Customer Loyalty

 

Subscription-based services like streaming platforms have mastered this. Instead of outright price hikes, they introduce tiered pricing and exclusive content, keeping customers engaged even as costs rise. Loyalty programs, bundling, and flexible payment options can help businesses maintain customer trust.

 

Pricing Recruitment For Pricing Managers!

 

You Need a High-Value Pricing Team Amidst Inflation

 

The businesses that thrive in this high-cost economy are those with a clear pricing strategy and the right people to execute it. A dedicated pricing team ensures decisions aren’t based on guesswork but on data, market insights, and customer behaviour. 

 

Companies that invest in pricing capability—through specialised teams, technology, and continuous learning—are better equipped to protect margins, stay competitive, and respond to change. Pricing is no longer just a function of finance or sales; it’s a critical business strategy that demands expertise and focus.

 

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Winning in the New Pricing Era Starts Now

 

Businesses that hold onto outdated pricing models risk losing profitability and market share. Inflation has changed pricing permanently, and companies must adapt with smarter, value-driven strategies. By focusing on perceived value, operational efficiency, market responsiveness, and customer engagement, businesses can navigate this high-cost landscape successfully. The businesses that embrace these changes will thrive. Those that don’t will struggle to keep up.

 

Every business faces unique challenges, but you don’t have to navigate them alone. If you’re unsure how to adapt your pricing, let’s talk. Together, we can find strategies that protect your margins and keep your customers loyal. The sooner you act, the stronger your business will be. So, what’s your next move?

 

For a comprehensive view of building a great pricing team to prevent loss in revenue, Download a complimentary whitepaper on How to Improve Your Pricing Team Performance.

 

Are you a business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?

If so, please call (+61) 2 9000 1115.

You can also email us at team@taylorwells.com.au if you have any further questions.

Make your pricing world-class!