The CEO’s Playbook for Adaptive Pricing

Over the last 5 years, Vistage members have navigated a level of volatility few of us could have imagined. We have experienced a global pandemic, supply chain breakdowns, labor shortages and wage spikes, inflation, and a chaotic round of tariffs. Pricing has been a moving target.

We offer no gimmicks. Below are practical measures business owners can take to provide fair pricing to customers while protecting margins. But first, a bit of history.

In February 2024, Wendy’s CEO Kirk Tanner commented during an earnings call that the company was preparing to introduce digital menu boards that could enable “dynamic pricing”. The suggestion that customers driving through at 6:00 p.m. might pay more than someone at 4:30 triggered an immediate backlash. The take was: the capitalists are greedy.

Tanner later clarified that Wendy’s was not planning surge pricing, but rather digital tools to manage promotions more effectively throughout the day. The damage, however, had been done.

During the pandemic, companies from construction to manufacturing shortened the windows for which their quotes were valid. Faced with dramatic swings in steel, resins, lumber, and freight, long-tail bids became imprudent. Hearing the same thing from multiple suppliers, customers adjusted as they understood their vendors were just trying to survive. Times have changed.

So, we are at an inflection point. A seemingly endless series of tariff actions has injected fresh uncertainty into cost structures. No business can operate in a world where its inputs (costs) are variable, and its outputs (prices) are fixed. That is a no-win situation.

The market is primed for a reset. Here are 7 steps towards adaptive pricing:

1. Wrap Your Head Around the Real Problem

First, recognize that your customers are hearing the same message from multiple suppliers. Cost volatility is not unique to you. Your competitors are facing the same pressures and likely exploring the same solutions.

Too often, CEOs tell themselves a story: “We can’t change our policies. Our customers won’t accept it.” In reality, the broader market conditions may provide more latitude than you think.

2. Leverage Chaos as a Strategic Opening

Periods of disruption create windows for broader strategic conversations. If you are absorbing risk tied to raw materials or currency exposure, it is reasonable to expect something in return.

For example, if you are agreeing to indexed pricing tied to commodities, perhaps customers can adhere to their payment terms. If you are guaranteeing capacity, perhaps customers commit to minimum volumes. If you are taking on tariff risk, perhaps contract durations change.

Use volatility as an opportunity to renegotiate in good faith toward win-win arrangements.

3. Lock in Costs Where Possible

Years ago, we worked with a Vistage member who was an asphalt contractor. Volatility in supply was eroding margins. The company ultimately purchased the plant that supplied much of its raw material, vertically integrating to control cost and availability.

Others use currency hedges, long-term supplier agreements, or strategic partnerships to reduce exposure.

A current client, Vistage member Forte Design and Build in Las Vegas, illustrates this well. As a residential builder, Forte not only self-performs significant portions of its work but has also developed a modular construction capability that dramatically compresses cycle time and controls costs.

4. Create a More Adaptive Pricing Approach

“Dynamic pricing” in its literal sense may not be appropriate for every business. But more frequent pricing adjustments almost certainly are.

Executives should establish external indicators of demand and raw materials as formal KPIs. Steel indices, freight benchmarks, backlog depth, and capacity utilization are examples of metrics that can easily be tracked.

Modern tools, including AI-enabled analytics layered onto computer systems, can track these indicators in real time. Lighter modular solutions embedded in platforms like NetSuite or Salesforce CPQ are often more practical for mid-market firms than complex ERPs.

Rarely should frontline salespeople have unilateral authority over pricing; it’s become too complex. Many Vistage members have added analysts to better understand true cost, margin by customer, and elasticity by segment.

Pricing management is no longer optional.

Read more from Marc Emmer, including his annual Business Trends and Beyond series, marketing analyses, and more on the Vistage Research Center.

5. If Appropriate, Institute Dynamic Pricing

It is not accurate to equate dynamic pricing solely with surge pricing. Clearly, dynamic pricing is in play in B2C, from airlines and hotels to e-commerce, where marketers A/B test in real time.

In a B2B context, it is disciplined margin management.

At its core, dynamic pricing means adjusting prices based on demand, capacity constraints, cost inputs, and customer behavior — not simply applying a cost-plus markup and hoping for the best.

In practical terms, this means active management of quote-to-order pricing, contract renewals, spot pricing, bid strategy, volume discounts, fuel or steel surcharges, and margin floors by customer segment.

In construction and manufacturing, modern systems can flag underpriced quotes before they leave the building. They can recommend higher margins backlog is strong. They can trigger surcharge adjustments when inputs spike. They can identify customers with low price elasticity.

The operative question becomes: what is the highest price we can charge and still win? Managing pricing can materially impact the bottom line.

In construction, margin lifts of 1–3% without volume loss are common when backlog-based pricing is introduced. In manufacturing and distribution, 200-400 basis points of improvement from reduced “special pricing” leakage is typical.

6. Measure Close Rate as a Pricing Signal

Close rate is one of the simplest and most overlooked indicators of pricing management. If you are winning nearly every bid, you may be leaving money on the table. If your win rate collapses, you may be overreaching. Sophisticated firms flex pricing based on win percentage, segment, and backlog depth.

7. Understand Your True Margins

Finally, adaptive pricing requires financial clarity.

Advanced forecasting methods — such as rolling 6+6 projections—allow leadership teams to see how changing costs and pricing decisions affect the P&L in real time.

For those willing to rethink rigid pricing models and implement more adaptive systems, this moment may allow greater margin capture—not less. The key is thoughtful execution, clear communication, and a commitment to fairness.

The lesson from Wendy’s was not that dynamic pricing is impossible. It was that narrative matters. Handled properly, adaptive pricing is not opportunism. It is leadership in the face of uncertainty.

0 views