Where are pricing strategies headed?

Those who don’t learn from history…well, you know the line. And those who can’t learn from pricing challenges of recent years? They’re definitely doomed to repeat it.

As material costs and inflation rose in recent years, many companies hiked their prices, but some eventually rolled back those increases as input costs stabilized, Ellen Kan, partner at Simon-Kucher who focuses on fast-moving consumer goods, pointed out.

Now, we’re seeing “a shift to a different type of [cost] landscape…that is actually even more challenging,” she continued. “What we’re hearing from a lot of our clients is that the freight cost increases are starting to hit the P&L, and it’s actually pretty substantial and pretty real.”

All the while, the consumer environment continues to pose problems, she said. “You have increasing signs in the marketplace that it’s a more price-sensitive consumer, that [consumers are] demonstrating more value-oriented shopping behavior, and then also retailers are increasingly concerned about affordability, and less willing to accept price increases from manufacturers.”

Amid this landscape, new pricing tactics, including those involving tariff refunds from a Supreme Court decision, have come to the fore. But if companies forget the lessons gleaned from recent pricing challenges, tariff-related tactics could easily fall flat, pricing experts caution. In other words: Those who don’t learn from history are doomed to repeat it. Swear we’ve heard that one somewhere…

Thanks, tariffs. Qualifying companies started getting one-time tariff refunds in May. Some of those companies, including retail behemoths like Walmart, unveiled plans to use that cash to lower prices—Walmart CFO John David Rainey said during an earnings call that $2.9 billion in tariff refunds allowed the retailer to lower the costs of 11,000 items.

For some companies, the positive impacts on sales were swift and noticeable: e.l.f. beauty, which had previously hiked prices to offset tariff impacts, first used its refund to discount a single product, which led to an almost 40% climb in unit sales, per the Wall Street Journal. The beauty retailer soon expanded price cuts across nearly its whole portfolio, eventually keeping those reductions on approximately 10% of its lineup, the Journal reported.

Fit and funding. Hearing these success stories, other CFOs may want to jump on board, but experts caution it would be like seeing clothes on a mannequin and assuming they’d fit the same on you.

“The refund on the tariff is a one-time cash infusion, and it’s not a structural unit economic change, whereas permanently reducing your pricing, for example, is a structural unit economic change,” Kan said.

And to that point, Jared Lipsitz, a partner in Bain & Company’s retail practice, said, “the key question is whether you’re using a one-time benefit to fund a permanent commitment.” Lipsitz told CFO Brew via email that he expects “many retailers to be more targeted, using the money for visible price investments, major promotional events, loyalty rewards, or a handful of strategically important items.”

Retailers can look into other levers that might solve “the affordability question,” Kan said, like “R&D and innovation efforts that can help offset some of the pressure on the portfolio, because…segments of consumers are willing to pay for truly meaningful innovation or premiumization.”

All the while, Lipsitz stressed that “permanent price cuts can still make sense, but only where the retailer has a credible way to fund them once the refund dollars run out.”

Reactive vs. strategic. More broadly, Kan and Lipsitz think the CFOs who keep looking ahead of the curve will be the ones who develop effective pricing strategies.

That’s one takeaway from the pricing challenges of recent years. “When you operate in a very challenged cost environment, and you’re more reacting to the cost basis as opposed to operating within a more strategic framework…you can end up with a lot of unintended consequences on the back end of it,” Kan said, referring to companies that lowered prices only to have to raise them again. “The companies that have looked at pricing more as a strategic growth capability have been the ones that have made better choices through it all,” she said.

Kan recommends “a three-year [pricing] plan for what you expect the shape of your portfolio to look like from multiple KPIs, whether that’s profit and profit margin, [or] also what you’re looking for from a household penetration for a topline growth perspective,” she noted.

“You need to evaluate your short-term reactionary actions in the context of that three-year vision,” Kan added.

What’s ahead. “Given the uncertainty around tariffs and input costs,” Lipsitz said, “I wouldn’t have one pricing plan for 2027. I’d have a set of scenarios and clear triggers for how the business responds as the cost environment changes.”

What will CFOs prioritize for the rest of this year and 2027? “The next phase of retail pricing is going to be less about responding to a single shock and more about managing a persistent affordability challenge,” Lipsitz said. “For the rest of 2026, tariff refunds give retailers some temporary room to make targeted, visible investments in value. But as we move into 2027, the question becomes how to sustain that value once the one-time refund benefit is gone, while many of the underlying cost pressures remain.”