Pricing Strategies for Manufacturers

I have spent years in the highs and lows of the consumer goods industry but never seen a pricing climate quite like this. Manufacturers are getting squeezed from every direction-tariffs, skyrocketing raw material costs, and relentless supply chain disruptions. The old playbook of raising prices to cover costs? That’s dead. Why? Because consumers are feeling the pressure too. A 2024 Nielsen report makes it clear: today’s shoppers are scrutinizing every dollar they spend, and brands that aren’t strategic about pricing risk losing market share fast. Here’s what I’m seeing from top CPG brands that get it: 1️⃣ Walmart is investing heavily in AI-driven pricing models to keep costs competitive-e-commerce now makes up 18% of total revenue. 2️⃣ PepsiCo is doubling down on pack-size innovation, offering smaller, affordable options to maintain volume without excessive discounting. 3️⃣ Luxury brands are using price elasticity models, testing demand thresholds before rolling out increases-avoiding consumer pushback. 4️⃣ Supply chain resilience is non-negotiable. Companies are shifting manufacturing away from China, despite short-term cost spikes, to avoid future geopolitical risks. The smartest brands aren’t just reacting. They’re rethinking. They’re moving toward Revenue Growth Management (RGM) frameworks that help them: ✅ Optimize pricing and promotions (because blanket price hikes are a losing game) ✅ Focus on margin-smart growth, not just revenue ✅ Leverage data analytics to make smarter, faster pricing decisions Brands that don’t evolve risk eroding profitability or pricing themselves out of the market. CPG leaders who master strategic pricing, operational efficiency, and consumer-driven value creation will own the future of this industry. Are you adjusting your strategy, or just reacting to rising costs? Because in 2025, only the most adaptable brands will win. #CPG #FMCG #PricingStrategy #RevenueGrowth #ConsumerGoods

Set and forget is not a pricing strategy ! Price--> Design--> Build We know that's what everyone says, but thats an oversimplification of what the entire process should look like. The assumption your pricing was correct in the pre-design phase and doesn't need change is dangerous, dangerous, dangerous !! I have seen too many physical and software products change drastically between initial design to final delivery. Product owners will typically assume that pricing still holds. You have to change that philosophy. In the real world we need a lot more iteration in price: Step 1: Initial Price: This stage you quantify the value and set an initial target price. This is a combination of internal/external research, some value quantification and pricing knowledge. Step 2: Design: With that price info, the product team designs a product that hits product and profitability targets. This is also where you need to keep track of the product margins. Often product will go design a better product at the expense of higher cost, and margins suffer before launch. Step 3: Reprice: Now that we know the new design constraints that impact the profitability, this stage gives you the opportunity to reprice the product based on the design. If substantial value has been added, price should go up. Do not fall into the 'lets over deliver on value and keep price same' trap. Step 4: Build: Now with that new price info and product roadmap the product goes through the build stage. Step 5: Pre launch reprice : Now significant time may have passed since last price review. The market for the product, the economy etc may have changed. This stage can assist in making last changes before product goes out. Good time to also establish guardrails for price performance, discount strategy, or sales strategy. Step 6: Launch: Goes without saying the product is out in the real world. Great way to capture feedback. Also a stage where performance is measured against the price guardrails. Step 7: Reprice 3: Based on sales feedback, you start charting next steps. Selling too slow, you may need discount or reprice. Selling too fast, it may be overdelivering on price vs value. Pricing metric may need change. Fx may have changed. This is the price adjustment stage, should be annual or semi annual. You can incorporate these steps into new product introduction framework or annual or semi annual pricing strategy process, either ways it will help establish good pricing principles in the org. I know of many products that once designed were never repriced years into its life.. Surely things must have changed all those years... Think of Pricing as a lifecycle !! -------------------------- We are in #Pricingtribe.

Our most underestimated pricing strategy? Subscription models. It’s tempting to think pricing is just about one-time sales, but subscription models are rewriting the rules. They’re more than a trend—they’re a strategy for sustained growth and loyalty. Here’s why subscription models matter: → Predictable Revenue Steady, recurring income helps businesses plan better and weather market fluctuations. → Stronger Customer Bonds Subscriptions aren’t just transactions—they build relationships. Convenience, value, and personalization create loyalty. → Tiered Flexibility Different customers, different needs. Tiered plans let businesses cater to everyone—from budget-conscious shoppers to premium buyers. What about dynamic pricing? It’s another game-changer. Static pricing is out. Real-time adjustments are in. → Real-Time Adjustments Dynamic pricing powered by AI reacts to market shifts, competitor moves, and customer demand instantly. → Data-Powered Decisions AI sifts through trends, behaviors, and sales data to find optimal price points—no guesswork required. → Market Responsiveness Inflation or demand spikes? Proactive price changes keep you competitive without alienating customers. So, how do you stay ahead? 👉 Leverage Technology: Adopt AI tools to fine-tune your pricing and uncover opportunities. 👉 Stay Flexible: Pricing isn’t static—test, learn, and adapt as markets evolve. 👉 Prioritize Value: Show customers why your pricing reflects the value you provide. Subscription models and dynamic pricing aren’t just innovations—they’re the future of profitability and customer loyalty. What’s your strategy for embracing these trends? Let’s dive into it!

Years ago at Mercatus, my CEO gave me a mandate: Overhaul our pricing. I could have stumbled through trial and error or copied competitors. Instead, I brought in Pricing I/O - a team that treats pricing like a growth system After four months, the business metrics changed dramatically. But more importantly, the way I think about pricing. We made 5 specific shifts. Consider this a 5oz sampler flight of what we learned. 1️⃣ From Guesswork to Intentionality • Replaced random pricing with structured frameworks • Used market benchmarks instead of internal hunches 2️⃣ From Internal Assumptions to Client-Driven Strategy • Interviewed customers for real willingness-to-pay data • Shifted packaging based on actual value perception 3️⃣ From Late-Stage Pricing to Value Creation • Introduced pricing discussions earlier in sales journey • Anchored sales conversations around measurable outcomes 4️⃣ From Messy Data to a Bullet-Proof Foundation • Cleaned tracking across discounts, pipeline, and usage • Built recurring reviews to guide pricing strategy shifts 5️⃣ From Deal Maximization to Enterprise Value Creation • Designed pricing for expansion, not single deal wins • Focused on lifetime value instead of short-term revenue Most pricing mistakes don’t come from bad intent. They come from unexamined habits. Fix those habits, and pricing stops being guesswork - it becomes your growth engine. ♻️ Repost to help another operator stop guessing.

For over a decade, I've worked alongside mid-market CPG brands ($50MM - $1B revenue), and the story is often the same: smart people, great products, but struggling to maintain profitable growth in the face of relentless pressure. Trade promotions that don't deliver and subsidize baseline sales, competitor price wars, and the constant battle for margin across the value chain. It's exhausting, and frankly, it's often unnecessary. This isn't about "tough market conditions." It's about having the right system for Pricing and Revenue Growth Management Analytics and processes. It's about moving from reactive firefighting to a proactive, insights-driven strategy built on a foundation of integrated/harmonized data and some essential predictive analytics/scenario analyses (no fancy AI). 𝗛𝗲𝗿𝗲'𝘀 𝘁𝗵𝗲 𝗿𝗲𝗮𝗹𝗶𝘁𝘆 𝗜 𝘀𝗲𝗲 𝗺𝗼𝘀𝘁 𝗼𝗳𝘁𝗲𝗻: • 𝗣𝗿𝗼𝗺𝗼 𝗥𝗢𝗜? 𝗔 𝗕𝗹𝗮𝗰𝗸 𝗕𝗼𝘅. Many brands are flying blind, repeating promotions without knowing if they generate incremental profit. Retail buyers are often in the dark as well. We're talking about potentially wasting 10-20% of gross revenue on ineffective trade promotions. • 𝗖𝗼𝗺𝗽𝗲𝘁𝗶𝘁𝗼𝗿-𝗗𝗿𝗶𝘃𝗲𝗻 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 𝗣𝗮𝗻𝗶𝗰. Reacting to every competitor's move leads to a race to the bottom. You need the proper Pricing RGM intelligence and scenario planning, not knee-jerk reactions. • 𝗧𝗵𝗲 𝗣𝗿𝗼𝗳𝗶𝘁 𝗣𝗼𝗼𝗹 𝗠𝘆𝘀𝘁𝗲𝗿𝘆. Who's benefiting from your promotions? Are you subsidizing your distributors or retailers? The lack of transparency here is a significant margin leak. It doesn't have to be this way. Here's how to take back control: 1. 𝗧𝘂𝗿𝗻 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗮𝗻𝗱 𝗲𝘅𝘁𝗲𝗿𝗻𝗮𝗹 𝗗𝗮𝘁𝗮 𝗶𝗻𝘁𝗼 𝗔𝗰𝘁𝗶𝗼𝗻𝗮𝗯𝗹𝗲 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 𝗮𝗻𝗱 𝗽𝗿𝗼𝗺𝗼 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀. Stop guessing. Implement a driver-based revenue and margin analysis to isolate the true impact of price, volume, mix, and competitive actions. Promo ROI capabilities enable you to reallocate spend to profitable promotions and strategically adjust pricing or product mix. 2. 𝗣𝗿𝗲𝗱𝗶𝗰𝘁, 𝗗𝗼𝗻'𝘁 𝗥𝗲𝗮𝗰𝘁. Near real-time price intelligence and scenario modeling are weapons against price wars. Model pricing impacts and make proactive decisions to protect your brand and bottom line. 3. 𝗠𝗮𝗽 𝘁𝗵𝗲 𝗣𝗿𝗼𝗳𝗶𝘁 𝗣𝗼𝗼𝗹 𝗟𝗮𝗻𝗱𝘀𝗰𝗮𝗽𝗲. It reveals exactly where value is being captured—by you, your distributors, or the retailers. It also helps with renegotiating trade terms. 4. 𝗣𝗿𝗶𝗰𝗲 𝗳𝗼𝗿 𝗩𝗮𝗹𝘂𝗲, 𝗡𝗼𝘁 𝗝𝘂𝘀𝘁 𝗩𝗼𝗹𝘂𝗺𝗲. Price-value mapping aligns your pricing with customer perception and willingness to pay. It's about reinforcing brand equity while maintaining profitability. Stop leaving your pricing to chance. I've created a 𝗖𝗣𝗚 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 & 𝗥𝗚𝗠 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗲 𝗛𝘂𝗯 specifically for mid-market CPG brands. It's packed with practical guides, tools, and frameworks you can use immediately to address the above pain points. The link to access is in the comments.

One of my most rewarding projects involved a client who was struggling to increase sales despite having a strong product offering. After a thorough analysis of their pricing strategy, I identified a few key areas for improvement. Firstly, the client was offering too many discounts and promotions, which diluted the perceived value of their products. To address this, I recommended reducing the frequency of discounts and focusing on creating a more premium perception. Secondly, the pricing structure was overly complex, making it difficult for customers to compare products and make informed decisions. We simplified the pricing tiers and introduced a clear value proposition for each option. Finally, we adjusted the pricing based on market research and customer feedback. By understanding the competitive landscape and the customers' willingness to pay, we were able to optimize the prices to maximize revenue. These changes resulted in a significant increase in sales, with a 40% boost in revenue within the first quarter. The client was thrilled with the results and has continued to see positive growth. How have you been able to optimize your pricing strategy to increase sales? What factors do you consider when making pricing decisions?

💡Helping a Mentee Navigate Pricing Strategies 💡 When it comes to answering pricing questions and crafting a robust pricing strategy, it's all about understanding the product's positioning, goals, and target market. Here's how I recently guided a mentee navigate the pricing strategy conversation with confidence. Here's a peek: 1. The Big Picture: Positioning & Goal * Mass vs. Luxury? Begin by understanding if the aim is to make the product universally accessible or cater to a niche luxury market. This sets the foundation for your pricing approach. * Revenue Split: If applicable, delve into whether there's a revenue split involved, which can influence pricing decisions significantly. * Market Saturation: How crowded is the space? Consider the competitive landscape. * Next Best Alternative (NBA): What’s the price of the next best alternative that exists today and how does your product add unique value? 2. Unveiling Value: Cost & Perception * Cost-Based Pricing: Understand your production costs to set a healthy baseline. * Perceived Value: What's the worth your product holds in the customer's eyes? * Behavioral Pricing Strategies: Explore behavioral pricing techniques and conduct price testing to optimize pricing for maximum profitability. * Adapting to Product Lifecycle and Market Conditions: Understand how pricing may need to adapt based on changes in the product lifecycle or market dynamics. * User Willingness to Pay: Gauge customer spending power to ensure a fair price. 3. Unveiling the Pricing Toolbox * Versioning: Offer tiers with varying features at different price points. * Bundling: Combine products to create attractive value packages. * Multi-User Licenses: Cater to teams with volume discounts. * Consumption-Based Pricing: Charge for what's used, ideal for variable usage. * Subscription Model: Provides recurring revenue for predictable usage patterns. 4. The Power of Choice: Subscription vs. Pay-Per-Use: * Subscription: Ideal for predictable usage and fosters long-term customer relationships. Factors to consider: CAC (Customer Acquisition Cost), LTV (Lifetime Value), upsell opportunities, and ecosystem value. * Pay-Per-Use and and Replacement Units: Perfect for customers with fluctuating needs. Consider purchase frequency and replacement cycles. Remember, pricing is a strategic journey, not a destination. By understanding these factors and exploring various models, you can craft a pricing strategy that converts and fuels growth! #pricingstrategy #productmanagement

𝗛𝗼𝘄 𝘁𝗼 𝗱𝗲𝘁𝗲𝗿𝗺𝗶𝗻𝗲 𝗣𝗿𝗼𝗱𝘂𝗰𝘁 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆 (𝗪𝗶𝘁𝗵𝗼𝘂𝘁 𝘁𝗵𝗲 𝗴𝘂𝗲𝘀𝘀𝘄𝗼𝗿𝗸) When it comes to deciding product’s pricing strategies, most of the PMs have 2 approaches: → Guessing work → Get overwhelmed by over 25 pricing strategies available in the market It makes the hard thing (pricing) even harder to decide and execute. But let me share a simple 3 step framework that would work for almost all the product pricing strategies. 1. 𝗖𝗼𝗹𝗹𝗲𝗰𝘁 𝗮𝗻𝗱 𝗮𝗻𝗮𝗹𝘆𝘇𝗲 𝗱𝗮𝘁𝗮 - The first step is to dive into the data. - Study competitor pricing, identify key profit margins, and identify customer segments that are most profitable for you at the current stage. - Look for insights that reveal how your product is perceived in the market. 👉 For instance, when Swiggy ventured into subscription models, it experimented with its Swiggy Super plan. By analyzing customer data, it found that users preferred free delivery perks. This insight allowed them to create a pricing model that not only increased subscriptions but also improved overall order volumes. ✅ So, pricing should always be a dynamic process. Don’t rely on a “set and forget” approach. Continuously engage with your pricing team and adjust based on market shifts and customer behavior. 2. 𝗙𝗼𝗰𝘂𝘀 𝗼𝗻 𝗰𝘂𝘀𝘁𝗼𝗺𝗲𝗿 𝘃𝗮𝗹𝘂𝗲 - Don’t focus solely on maximizing profits or sales volumes, think about the value your product delivers. Consumers today are willing to pay a premium for products they feel add significant value. 👉 Consider Tata Nexon EV, one of India's leading electric vehicles. Despite higher upfront costs compared to traditional fuel cars, it offers long-term savings and environmental benefits, which customers perceive as valuable and they are buying it. ✅ As a product manager, your job is to understand what drives consumer decision-making. Are they paying for premium features, better service, or convenience? The more you emphasize value, the stronger your pricing strategy will be. 3. 𝗗𝗲𝘃𝗲𝗹𝗼𝗽 𝗼𝗽𝘁𝗶𝗼𝗻𝗮𝗹 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 𝗺𝗼𝗱𝗲𝗹𝘀 - Once you understand your costs and customer segments, develop three pricing strategies - conservative, aggressive, and a middle ground. - Think of it as a Goldilocks approach: one option may be too extreme, another too safe, but the third might hit the sweet spot. - This gives your business a range of options to test and optimize. 👉 Take Netflix India as an example. When it introduced the low-cost mobile-only plan, it allowed the company to penetrate deeper into the price-sensitive Indian market. By offering different pricing tiers, Netflix was able to serve both premium and budget-conscious users. 𝗜𝗻 𝗮 𝗻𝘂𝘁𝘀𝗵𝗲𝗹𝗹: Pricing is all about understanding what your customers are willing to invest in terms of time, energy, and money. What's your go-to strategy for product pricing?

5 key drivers behind wafer pricing and how foundries set pricing strategies across customers and process nodes 1. Process Node Complexity & Technology Level 🚀 Smaller nodes (7nm, 5nm, 3nm) require: EUV lithography More process steps Higher defect control This directly makes leading-edge wafers 5–10× more expensive than mature-node wafers. 🚀 Pricing impact: 28nm wafer: ~$3,000–4,000 5nm wafer: ~$16,000–20,000 🚀 Foundry strategy: Premium pricing for cutting-edge nodes with limited supplier competition (TSMC, Samsung). Discounts rarely offered at advanced nodes due to tight capacity. 2. Capacity Utilization & Supply–Demand Balance When foundry capacity is full, prices increase; when underutilized, prices drop. 🚀 Example: During the 2021 shortage, 90nm & 40nm prices rose 20–30%. During downturns, foundries offer wafer-price cuts to secure volume. Foundry strategy: Use dynamic pricing depending on market cycles. Push long-term agreements to stabilize demand. 3. Customer Volume Commitments & Long-Term Contracts 🚀 Larger customers with predictable volume get better pricing. Examples: Apple gets discounted 5nm pricing due to massive annual wafer starts. Smaller companies pay premium “spot” pricing for small or irregular orders. 🚀 Foundry strategy: Tiered pricing (VIP customers, high-volume, low-volume). NCNR contracts → lower risk → lower pricing. 4. Mask Set & NRE (Non-Recurring Engineering) Costs Mask sets vary dramatically: 65nm mask: ~$0.5–1M 7nm EUV mask: ~$10–20M High NRE means higher upfront cost for customers. 🚀 Foundry strategy: Charge NRE separately (mask + setup costs). Offer “shared shuttle runs” for startups or low-volume markets to reduce cost. 5. Yield Rates & Process Maturity Low yields increase effective cost per working die. Mature nodes (40nm, 65nm) have yields ~95%+. New nodes (3nm) may start with yields ~50–70%. 🚀 Foundry strategy: During early node ramp, pricing is high to offset low yields. Prices gradually drop when yield improves and volume scales. 🚀 How Foundries Set Pricing Strategies Foundries combine multiple factors to determine wafer pricing: ✔ Node technology tier Leading-edge = premium pricing due to limited global suppliers. ✔ Customer size & strategic importance Top customers get negotiated pricing, priority access, and capacity guarantees. ✔ Wafer volume & long-term agreements Bulk orders reduce cost; spot orders cost more. ✔ End-market type Automotive requires long lifecycle → stable pricing Consumer electronics → more volatile, cycle-based pricing ✔ Competitive landscape If TSMC is full, Samsung or Intel Foundry may offer promotional pricing to win customers. ~~~~~~ If you are looking to invest in semiconductors, and need expert insights, drop us a DM.

📝 Price in FMCG: In Short Price in the FMCG is more than a figure on a label. It is a critical tool that shapes consumer behavior, influences brand perception and determines how much market share to capture. Basically FMCG products are sold in large quantities and usually have low margins due to this a small pricing decision dramatically affect revenue and profitability. 1. 🎯 Objectives: Pricing objectives represent the strategic goals a company aims to achieve when determining the price of its products. It include the key objectives listed down: - Market Penetration: Setting a low price initially that helps to quickly gain market share, attract new customers and discourage competitors from entering the category. - Profit Maximization: Balancing cost and price to deliver optimal profit margins. This often involves premium positioning or targeting less price sensitive segments of a specific segment. - Price Stability: Keeping prices steady to maintain trust with distributors, retailers and consumers. Inconsistent pricing damage brand equity and confuse the market. - Competitive Positioning: Pricing to match or undercut competitors while maintaining value perception. In FMCG, shelf space takes to revolve around competitive pricing. 2. 🛠️ Types of Pricing Strategies in FMCG - Everyday Low Pricing (EDLP): A consistent low price without frequent discounts. This builds trust with price conscious customers. - High Low Pricing:- Keeping regular prices high but using frequent promotions, discounts and coupons to boost short term sales. - Bundle Pricing: Offering multiple products together at a reduced total price to encourage bulk purchase. - Psychological Pricing: Setting prices just below a round number to make them appear cheaper. This is highly effective in FMCG because purchase decisions are quick. - Premium Pricing: Charging more to signal superior quality or exclusivity. It works well for niche FMCG segments such as organic food, luxury personal care products, etc... 3. 🪜The Price Ladder in FMCG: A price ladder allows consumers to trade up or down within the similar or substitute product:- - Entry Pack (Trial Size): Small and affordable to encourage trial by first time buyers. Eg. Mini sachets of powder detergent - Standard Pack: Regular size for everyday purchase; main revenue driver. - Family/Value Pack: Larger size with a lower unit cost to reward loyal buyers & encourage stock ups. Eg. Large refill packs or economy jars. In summary, price in FMCG is not simply a cost plus margin calculation rather it is a powerful strategic leverage that influences trial, repeat purchase, brand loyalty and market share.