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EXECUTIVE PREMISE
Pricing is usually owned by commercial functions, especially sales. Its credibility, however, rests on decisions made upstream: supply availability, cost exposure, specifications, lead times and volume economics. P&G said pricing and cost cuts became its principal levers when tariffs raised input costs and short-term sourcing changes proved difficult; Nike paired a shift away from Chinese production with “surgical” price increases; Adidas indicated it would try to keep established models stable while pricing new products differently. ([Reuters], 2025a; [Reuters], 2025b; [AP], 2025)
WHY THIS MATTERS
The leadership issue is not whether Procurement should take ownership of pricing. It is whether the function is present early enough to improve the decision before a commercial commitment hardens.
When Procurement appears after Sales has selected the price, it is commonly experienced as a cost verifier. The discussion narrows to how much cost can be absorbed, passed through or negotiated away. A more enterprise-relevant contribution is to make the available choices legible: where the true cost floor sits, which supply risk is priced into the offer, and whether a specification or service decision is strengthening or quietly damaging the margin.
BCG frames pricing around cost, customer value and competitive alternatives. Procurement is therefore not the owner of the number, but a material owner of one of the three inputs and a practical contributor to the other two. ([BCG], 2023)
THE REAL DYNAMIC
Cost-plus is a necessary discipline. It protects against selling below an economic floor. It is not, on its own, a pricing strategy. A cost increase does not establish what a customer will pay, whether a higher price should apply across every segment, or whether a different offer could protect margin more effectively.
The company cases are useful because they show different responses to the same category of pressure. P&G linked tariffs, limited short-term sourcing alternatives and price action. Nike combined a sourcing shift with selective price increases. Adidas separated known models from new products and explicitly considered the demand consequences of broader price moves. ([Reuters], 2025a; [Reuters], 2025b; [AP], 2025)
The other side of the decision is value. LVMH said it could raise prices by roughly 2–3% in high-end products but described materially lower pricing capacity in cognac and beauty. The distinction is not simply one of cost; it is one of customer, category and perceived value. ([Reuters], 2025c) B2B research makes a similar point: buyers assess an offer through functional value and ease-of-doing-business factors as well as the product itself. ([Harvard Business Review], 2018)
This is where technically strong procurement leaders can stall. They bring a purchasing variance, while the room needs a decision. The more useful question is not, “Can we recover four percent?” It is, “Which combination of price, specification, supply model and expected volume gives us the strongest contribution margin with acceptable risk?”
That question needs evidence. Research on willingness to pay cautions that direct customer responses can be distorted by hypothetical bias. A B2B study using customer offers, features, discounts and observed purchase decisions illustrates a more robust direction: treat customer value and discount appetite as measurable hypotheses rather than assumptions used to defend a target price. ([Hofstetter et al.], 2021; [Colias, Park & Horn], 2021)
WHAT STRONG LEADERS DO DIFFERENTLY
They do not arrive in the pricing round with a savings headline. They arrive with a decision layer.
The first element is a risk-adjusted cost corridor: current variable cost, secured cost, and scenario cost under tariff, freight, FX, supplier-switch or disruption conditions. This replaces a misleading single “should-cost” number with a range that Finance and Sales can use.
The second is a value bridge: the feature, service level, delivery commitment or origin attribute that the customer is likely to value, alongside its cost and supply conditions. This creates a disciplined conversation about which complexity supports price and which merely consumes margin.
The third is a contribution-margin decision sheet for the five most margin-critical offers. It shows price, variable cost, service cost, expected volume and supply risk in the same view. The commercial owner remains responsible for the price. Procurement becomes responsible for making the choice more credible.
CPO PATH DIAGNOSTIC
Question | Fully true | Partly true | Not true |
|---|---|---|---|
Procurement is involved before price, pack, specification or launch decisions are fixed. | ☐ | ☐ | ☐ |
We can show a risk-adjusted cost corridor for our margin-critical offers. | ☐ | ☐ | ☐ |
We distinguish between a cost-recovery case and a value-backed price move. | ☐ | ☐ | ☐ |
Sales, Product, Finance and Procurement work from one contribution-margin view. | ☐ | ☐ | ☐ |
We can identify specifications that support price and those that only add internal complexity. | ☐ | ☐ | ☐ |
ONE-LINE VERDICT
Procurement earns influence in pricing when it turns supply reality into commercial options before the price becomes a defence.
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SOURCES
Associated Press. “Nike Soars on a Production Shift Away From China, but It Warns of a $1 Billion Tariff Hit.” 27 June 2025. https://apnews.com/article/nike-china-tariff-trump-f84fe37e11dbf4b439d8655d3533380c
Boston Consulting Group. “The Unified Theory of Strategic Pricing.” 2023. https://web-assets.bcg.com/pdf-src/prod-live/the-unified-theory-of-pricing.pdf
Colias, John V., Stella Park, and Elizabeth Horn. “Optimizing B2B Product Offers with Machine Learning, Mixed Logit, and Nonlinear Programming.” Journal of Marketing Analytics, 2021. https://doi.org/10.1057/s41270-021-00113-y
Harvard Business Review. Almquist, Eric, Jamie Cleghorn, and Lori Sherer. “The B2B Elements of Value.” March–April 2018. https://hbr.org/2018/03/the-b2b-elements-of-value
Hofstetter, Reto, Klaus M. Miller, Harley Krohmer, and Z. John Zhang. “A De-Biased Direct Question Approach to Measuring Consumers’ Willingness to Pay.” International Journal of Research in Marketing, 2021. https://doi.org/10.1016/j.ijresmar.2020.04.006
Reuters. “P&G Looks to Raise Prices as Tariffs Hit Costs and Force Forecast Cuts.” 24 April 2025. https://www.reuters.com/business/procter-gamble-lowers-annual-forecasts-trade-war-hits-consumer-demand-2025-04-24/
Reuters. “Adidas May Hike Prices, Warns of US Consumer Hit From Tariffs.” 30 July 2025. https://www.reuters.com/business/adidas-may-hike-prices-warns-us-consumer-hit-tariffs-2025-07-30/
Reuters. “LVMH Has Room to Raise Prices 2–3%, LVMH Deputy CEO Says.” 28 May 2025. https://www.reuters.com/business/retail-consumer/chinese-consumers-travel-spend-less-lvmh-deupty-ceo-says-2025-05-28/
Thank you for reading,
Pascal Hecker | Editor-In-Chief, CPO Path.