Rising tariffs usually mean higher prices, but pricing software can help you manage costs and set prices smartly.
It’s everywhere in the news right now: the U.S. administration is raising tariffs and revoking the de minimis rule, which allowed low-cost goods to enter the country without taxes. For retailers, this means higher costs, and for consumers, it often means higher prices. But is a sudden raise in prices the only solution?
Not necessarily. While sometimes increasing prices is unavoidable, it doesn’t have to be your first move. Tools like pricing software and AI can help retailers find smarter ways to protect their margins and keep customers happy.
Before you hit the “price increase” button, it’s worth exploring how technology can help. Software can optimize how you price, sell, and manage your inventory – giving you options to stay competitive without raising prices – and panicking – too quickly.
Table of Contents
1. Are your prices currently optimized?
Yes, we know – we’re focusing on handling rising tariffs without jumping straight to price hikes. But before rushing into any pricing decisions, stop and ask: Are my current prices optimized? Even without added pressures, you might be leaving money on the table. Maybe you’ve been underpricing your products and could have charged more this whole time without losing customers. Pricing software can help you figure this out by analyzing how much your customers are willing to pay.
Before reacting to cost increases, take a step back. How price-sensitive are your customers? Could you increase your prices slightly without damaging loyalty? What are your products’ price elasticity? With the right data, you can see if your prices are already competitive – or if you’ve been leaving money on the table. You can figure out if you’re already in a good position to adjust pricing without waiting for external pressures to force your hand.
By analyzing this first, you might find that tariffs won’t have as big of an impact on your business as you thought. And even if you do end up raising prices later, you’ll be doing it with a more informed approach.
2. Bundling & cross-selling: Give more value without raising prices
Instead of raising prices on individual products, why not offer bundles? Bundling lets you combine items at a special price, giving customers more value while protecting your margins. For example, pairing related products – like a coffee maker with a pack of filters – can boost sales without making customers feel like they’re spending more.
Pricing software can help here by identifying the best products to bundle based on what customers tend to buy together. It can even suggest cross-selling opportunities, like recommending accessories or add-ons that go with what customers already have in their cart.
This way, you’re increasing the perceived value of what you offer, keeping your margins intact, and avoiding the need for obvious price hikes.
3. Build loyalty with rewards programs or codes
When costs are rising, loyalty programs are a great way to keep your best customers engaged. People love to feel appreciated, and rewards can soften the blow if you do need to adjust prices later.
Loyalty programs often offer general discounts, but pricing software can ensure that these rewards don’t cut into your margins too much. With Pricen, you can automatically create optimized discount codes that make sense financially while still generous to your customers.
4. Use better inventory management to save costs - take advantage if you have overstocked
If you have a lot of products in stock that you bought before tariffs hit, you’re in a great position. Since you got those items at lower costs, you can keep your prices competitive or protect your profit margins while others are forced to adjust to higher costs.
But what if you didn’t plan ahead and are now dealing with higher prices? Don’t worry – there are still ways to manage. Using better inventory management can make a big difference. Pricing software can help you by:
- Selling slow-moving products faster: If you have items that aren’t selling, pricing tools can help you run discounts or promotions to free up cash and clear out space.
- Making the most of pre-tariff stock: You can use software to price products you bought at lower costs strategically, staying competitive while competitors are stuck with higher-priced goods.
- Keeping inventory in line with demand: Forecasting tools can help you predict what customers will want post-tariff so you don’t overstock or run out of popular items.
- Spotting smart bulk-buy opportunities: For items affected by ongoing tariff negotiations, software can show you which products might be worth buying in bulk now if the price is right.
By managing your inventory wisely and pricing your products strategically, you can handle rising costs without raising prices too quickly. Whether it’s clearing old stock or taking advantage of good deals on new inventory, these steps will help you stay ahead of the competition while keeping your customers happy.
5. Plan ahead with advanced analytics
One of the best things about modern pricing software is its ability to predict the future. It uses AI to analyze market trends, forecast cost increases, and help you prepare your product portfolio.
For example, if you know supplier costs are about to rise, you can simulate those costs in your pricing software ahead of time. This allows you to negotiate better deals with suppliers or even adjust your product mix to minimize the impact of price hikes. The software can also help you create targeted promotions or offers, ensuring that you’re keeping customers engaged and maintaining sales even while prices adjust.
By staying ahead of the game, you’ll avoid scrambling to fix problems after they happen – and that kind of preparation is priceless.
Why raising prices should be strategic
Sometimes, raising prices is unavoidable. But before you go there, take the time to explore your other options. Pricing software gives you a toolbox of strategies to handle rising costs without risking your customers’ loyalty.
Of course, pricing software isn’t your only tool. You should also consider other strategies like prioritizing local sourcing, strengthening supplier relationships to stabilize costs through long-term contracts, and adjusting other operational costs like packaging and sizing.
And if you do need to raise prices, pricing software ensures that you do so strategically. Instead of just raising prices across the board, you can adjust prices based on factors like product variants, location, season, channel, etc. This ensures you don’t alienate your entire customer base with a blanket price increase.
The way forward
Rising tariffs and costs can be challenging, but they don’t have to mean automatic and high price hikes. With pricing software and AI, retailers have powerful tools to adapt, stay competitive, and keep their customers happy.
From optimizing pricing and bundling products to improving inventory and planning ahead, there are plenty of ways to manage costs effectively. So, before hitting the panic button, take a moment to see what technology can do for you.
The future of retail isn’t just about raising prices – it’s about pricing smarter. And with the right tools, you can do just that.
