Over the past few years, financial leaders responsible for setting corporate product pricing strategies have faced considerable challenges, according to Adam Echter, a partner at global consulting firm Simon-Kucher & Partners and co-author of the book "Beating Inflation," which explores pricing and other strategies for companies to cope with inflation.

Between 2021 and 2023, in response to rapidly rising inflation, companies frequently raised prices: executives held urgent pricing meetings, abandoned the previous once-a-year adjustment rhythm, and raised prices up to nine times within 18 months. Echter revealed this in a recent interview with CFO Dive.

Market sentiment shifted last year. Consumers and B2B industrial customers experienced what Echter calls "price fatigue," becoming resistant to price increases, while the various indices that previously supported price hikes began to decline. At the same time, the Federal Reserve's years-long efforts to curb price pressures brought the annual Consumer Price Index (CPI) down from 9.1% in July 2022 to 2.7% in November of last year. In 2024, companies sought to maintain price stability, shifting their pricing strategy focus from price increases to cost reduction, Echter noted.

Now, Echter predicts that in 2025 companies will return to an offensive stance on pricing, as lower interest rates, proposed tariffs, and other policies of the incoming Trump administration could push inflation higher.

"Looking ahead to 2025, you're entering a world with a slight inflationary bias, which also means it's more favorable for price increases," Echter said. "CFOs have more 'cover' to ask for price increases again."

How CFOs will actually formulate pricing strategies this year—whether raising prices or better explaining why a product is worth its price—requires a thoughtful approach. Echter offers four pricing recommendations for 2025:

  1. Provide strong justification for your higher prices both inside and outside the company.Savvy CFOs will collaborate with sales teams to convey the message of higher product value without increasing costs. "Just by explaining why the value has changed, you might make more progress than expected," Echter said. This is relatively easier for industrial companies, as they typically have multiple opportunities to communicate with customers. Consumer-facing companies, such as grocers or other retailers, will face tougher challenges this year.
  2. Consider other options before cutting prices.Echter said that in recent years, companies have generally done well in keeping up with inflation through price increases, but have been less effective in explaining the reasons for those increases. Now they can focus on value communication, or add some perceived new value to their products. "If you don't or can't do either of those, then the alternative is to cut prices," he said.
  3. Don't over-discount.When developing discount and promotion strategies, market analysis is crucial. Echter noted that many companies "overreact" by adding costly extras to product bundles without realizing that customers may not value these giveaways. "We'll see many companies make this mistake, and that's where CFOs can step in: 'Before we add costs, we want to go to the market and research whether this is valuable to you?'"
  4. Look for smart value-adds.When convincing customers of a product's value, consider low-cost upgrades. For example, if a product offers a one-year warranty, consider extending it to two years; if it offers phone support from 9 to 5, try providing 24/7 service—both options can be highly scalable at relatively low cost. "If I can find items that are valuable to customers but relatively low cost, good CFOs will start adding those items," he said, thereby defending profit margins.