A Framework for Smarter Price Increases

Every autumn, commercial teams struggle to lock in next year's pricing. Too often, the process is driven by gut feel or simply copying last year's approach. The result? Missed opportunities, increased retailer friction, and a pricing architecture that doesn't reflect the real value you deliver.

Getting price right isn't just about pushing through an annual increase. It's about building a sustainable pricing architecture that protects your margins, supports your brand, and gives you room to negotiate without giving everything away.

Why pricing goes wrong

Most pricing processes fail for the same reasons:

• Decisions are made too late: commercial teams scramble in October for a January implementation, with no time to build a credible business case
• Cost is the only driver: increases are calculated backwards from input costs, with no reference to value delivered or market dynamics
• There's no differentiation by customer: one list price increase gets sent to every retailer, regardless of their role, margin situation, or strategic importance
• The narrative is weak: "our costs went up" is the entire story, with no consumer data, category insight, or competitive context

The result is predictable: the retailer pushes back, the commercial team panics, concessions are made, and the net realisation falls far short of the target.

The five-step framework

At Falcon, we approach pricing through five sequential steps:

Step 1 — Cost audit: Start with a full breakdown of your cost base. Which costs are genuinely increasing? By how much? For how long? Be precise. Retailers will challenge vague cost claims. You need numbers you can defend.

Step 2 — Market scan: What are competitors doing? What has happened to category pricing in the past 12 months? What is the consumer's price tolerance, and where are the psychological thresholds? This context shapes your ambition.

Step 3 — Headspace analysis: Before you decide on the size of your increase, understand where you have room. Look at your price index versus private label, versus category average, versus your closest competitor. Where is your brand priced today, and where could it be?

Step 4 — Customer segmentation: Not all customers deserve the same approach. Classify your customers by their strategic role, margin sensitivity, and historical price acceptance. Design differentiated strategies — the same increase won't land the same way with a discounter versus a premium grocer.

Step 5 — Narrative construction: Build the story before you build the numbers. What is the consumer case for this price? What category role does your brand play? What investments are you making in quality, sustainability, or innovation that justify the move?

Building the business case

The business case for a price increase must answer three questions simultaneously:

1. Supplier P&L: Does this increase recover our cost inflation and protect or improve our net margin?
2. Retailer P&L: What happens to their margin at the new price? Are we asking them to absorb the full increase, or sharing the burden?
3. Consumer P&L: What is the elasticity? How much volume do we expect to lose, and what's the net revenue impact?

A price increase that works on your P&L but destroys the retailer's margin isn't a deal — it's a war. The strongest increases are structured so all three parties can make it work.

Model at least three scenarios: your target, a partial concession, and a floor. Know in advance what you'll do if the retailer rejects outright.

Communicating your increase

The moment you send the tariff letter, the negotiation begins. How you frame the communication matters as much as the numbers.

Lead with the consumer and category story, not the cost justification. Show that your brand is growing the category, driving footfall, or delivering margin density above the average. Then introduce the cost context — factual, specific, and supported by third-party data where possible.

Be clear about timing and implementation. Ambiguity invites delay, and delay costs you.

And remember: the tariff letter is not the negotiation. It's the opening position. Build in room to move — but know your floor before you start.