A strategic approach to pricing power in recessionary markets

Pricing is a powerful lever in volatile markets, enabling executives to defend value, signal market position, and align internal narratives without discounting.

In volatile markets where economic uncertainty and competitive pressure are intensifying, the pricing of your products and services is a strategic lever that can create, capture, and defend value.

Yet despite its critical role in driving profitable growth, pricing remains one of the least understood and most under-leveraged marketing functions in many organizations.

Leading firms like P&G, GE, and Salesforce treat pricing as a core marketing discipline, embedding it in every stage of the product lifecycle—from market entry and competitive positioning to recessionary defense strategies. But for many executives, pricing decisions remain tactical and reactive, driven by cost-plus logic or competitive benchmarking rather than strategic intent.

This article explains price, pricing, and price communication as three distinct but interconnected domains, demonstrating how each can be leveraged to build strategic moats, signal market positioning, and align internal stakeholders around a unified value narrative.

Defining Price, Pricing, and Price Communication

• Price: The numerical representation of value, strategically set to signal market positioning and manage perceived risk. Think beyond price as a number and see it as a strategic signal communicating where your products and services sit in the market and how much risk they mitigate.
• Pricing: The structured methodology behind setting, adjusting, and defending prices. Mature organizations treat pricing as a continuous, data-driven process rather than a one-time decision. Pricing strategy is a deliberate exercise in value extraction, risk mitigation, and strategic signaling.
• Price Communication: The art of framing the pricing narrative to align market and stakeholder perceptions with the intended strategic outcome. Price communication is an executive-level marketing mandate, structured to mitigate price objections, justify premium positioning, and align perceived value with corporate strategy.

Price as a signal: what it says about your strategy

Price is much more than the sticker on the box. It's a strategic signal that conveys intent, differentiation, and perceived risk to every stakeholder who encounters it. The price tag on a product is the most visible manifestation of corporate strategy, acting as a shorthand for perceived quality, exclusivity, or urgency.

What does price say to you about these companies?

• Walmart
• Ferrari
• Salesforce
• HubSpot

All make a promise through the price of their products and services. It is integral to each and every brand.

In recessionary markets, where cost-consciousness rises and discretionary spending shrinks, the role of price as a signal intensifies. Companies like P&G leverage price increases to reinforce premium positioning, even as competitors slash prices to maintain volume. The objective is clear: Price should convey strategic intent.

Pricing as strategy: building durable moats

A well-defined pricing strategy can be the strongest line of defense against discount-driven market erosion and rapid commoditization. Consider how you can operationalize pricing as a core strategic capability. Frameworks include:

• Value-based pricing: Aligns price with the customer's perceived value of the outcome, not cost of goods sold—like Nike's performance shoes or Kearney's operational insights.
• Dynamic pricing: Adjusts price based on demand elasticity, competitive actions, or macroeconomic factors.
• Tiered pricing (Good-Better-Best): Sequentially alters price to capture varying levels of consumer surplus, and when paired with price psychology becomes a powerful lever to direct purchase preference.

Together, these methodologies establish two critical functions:

• Pricing defensibility, and
• Category signaling.

Defensibility protects against commoditization, while category signaling reinforces brand intent—whether that's Walmart's cost leadership or Ferrari's premium scarcity.

The competitive landscape: market economics of pricing

The most successful pricing strategies account for competitive dynamics, not just internal value propositions. Your pricing power is defined as much by market structure as by product differentiation:

• Market concentration: In highly concentrated markets (few competitors), pricing power increases for all participants. In fragmented markets, even differentiated products face downward price pressure.
• Cross-price elasticity: How much do your sales volumes change when competitors adjust their prices? Low sensitivity indicates strong differentiation and higher pricing power.
• Competitive response patterns: Historical data reveals predictable responses to price changes – some competitors always match decreases but rarely follow increases, while others maintain rigid price positions.

This external view of pricing power has two critical dimensions:

• Defensive resilience: Your ability to maintain volume despite competitive price actions
• Offensive capability: Your ability to capture market share through strategic price moves

The most sophisticated pricing strategies leverage both supply and demand fundamentals:

• Supply constraints: Limited production capacity across the market creates pricing power even with minimal differentiation
• Substitutability: The more unique your offering, the lower the cross-price elasticity and higher your pricing power

Price communication as narrative control: framing the value story

Price is only as powerful as the narrative that surrounds it. When uncertainty is high, stakeholders need a compelling, credible story that connects price to tangible business outcomes.

In complex sales, the negotiation is as much about storytelling as it is about numbers. A $1M software license framed as a $3M cost-saving initiative is not just a transaction—it's a strategic investment.

Furthermore, pricing narratives are a critical component of stakeholder alignment. Price must be framed differently for finance (ROI and TCO), IT (integration and risk mitigation), and operations (efficiency and productivity). Mastering this multidimensional framing is imperative in enterprise sales.

Operationalizing pricing power

Many firms run the price strategy on autopilot, which is a mistake at any time and moreso in volatile environments like today. Here's how you can test the underlying assumptions about your firm's price structure:

• Pricing diagnostic: Conduct a comprehensive analysis to identify underpriced assets, misaligned pricing structures, and market position relative to competitors.
• Competitive response modeling: Develop game theory scenarios to anticipate how competitors will react to your price moves based on historical patterns.
• Cross-price elasticity measurement: Quantify how your sales volumes respond to competitors' price changes to identify vulnerability points.
• Market structure analysis: Assess concentration ratios, barriers to entry, and substitutability to determine natural pricing power.
• Scenario planning: Develop multiple pricing scenarios based on potential recessionary pressures, supply chain constraints, and competitive actions.
• Cross-functional pricing teams: Align finance, marketing, and sales around a unified pricing narrative that reinforces strategic positioning.

Strategic decision framework for Competitive Pricing

When facing pricing decisions in competitive markets, consider this decision tree:

1. Market Leader Position
   • High differentiation → Lead with price increases, forcing competitors to follow or sacrifice margin
   • Low differentiation → Maintain price stability, using non-price levers to build defensibility
2. Challenger Position
   • High supply constraints → Target specific segments with premium pricing, avoiding direct confrontation
   • Low supply constraints → Use surgical price actions in high-yield segments where the leader is vulnerable
3. Niche Position
   • High substitutability → Focus on reducing cross-price elasticity through enhanced differentiation
   • Low substitutability → Maximize margin through premium pricing, ignoring broader market movements

The last strategic lever in a market of sameness

When volatility compresses margins and competition intensifies, price becomes an incredibly powerful strategic lever for executives seeking to differentiate without discounting.

When framed effectively, price is more than a financial figure—it becomes a story of strategic alignment, risk mitigation, and operational transformation.

Master the art of price, pricing, and price communication—within the context of your competitive landscape—and you will do more than just protect margins. You will shape markets.

This post is a series about the marketing lever of price. My article, Value over price: how B2B buyers actually make decisions, explores the misconception that B2B buyers buy on price rather than risk adjusted value.