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The Pricer’s Four-Step Guide to Tariff Response | Pricing Matters

With the latest round of tariffs going into effect last Thursday, many companies are turning to their finance and pricing teams to provide a strategic response that maintains profitability without disrupting demand. To help navigate the complexities of tariffs, Vistaar has put together a four-step guide that allows finance and pricing teams to be nimble, assess the ever-changing pricing landscape, and empower leadership to quickly develop an optimal pricing response consistent with existing pricing strategy.

Step 1: Get the complete picture

First, get the complete picture as accurately as possible. Pricing practitioners must calculate the cost impact of the tariff, by product, across the complete product portfolio. This may include working with procurement to understand their purchasing and hedging strategies. Next, the cost impact by customer should be calculated, so that margin impact is known for each customer. Finally, it is critical also to consider the cost impact at a market level, so the big picture impact is also visible.

You are now ready to answer difficult questions such as – how does this proposed price change impact both the immediate and longer-term financial goals? Pricing technology can provide pricing practitioners and leadership the ability to easily consider the impact of proposed price changes and its effects on revenue and margin. It is a daunting task to iterate through pricing alternatives using excel spreadsheets. Enterprise-class pricing software enables users to focus their time on finding a desirable outcome, rather than combing through data and trapping errors.

Step 2: Don’t throw out the strategy

Pricing teams must go beyond aggregate data and formulaic calculation to achieve the most effective tariff price response. Batch price updates can leverage business rules that reflect your pricing strategy. Also, pre-existing terms in customer agreements such as price caps, collars, not-to-exceed guardrails, linkage to market indexes, and many other terms, must be respected when prices changes are performed.

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The Pricer’s Four-Step Guide to Tariff Response – Pricing Matters.

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