​Stop Peanut-Buttering Your Price Increases

When companies raise prices, they often face a strategic choice: implement one large increase or several smaller ones over time. This approach, known as 'peanut-buttering,' involves spreading price increases evenly across every product, market and customer. However, this blunt instrument approach rarely aligns with business priorities and can lead to suboptimal outcomes.

Pascal Yammine, CEO of Zilliant, a leader in price optimization software, argues that surgical pricing—making category-by-category, segment-by-segment and market-by-market adjustments—provides better results. For example, a company might raise prices in a market where it already leads to pursue higher margins, while becoming more aggressive on price in another market facing increased competition.

Match the Change to the Buyer

The frequency of customer purchases should significantly influence pricing strategy. For a restaurant buying tomatoes daily, raising the price from $1.00 to $1.50 overnight would be difficult to absorb. A seller could instead implement weekly one-cent increases, reaching the target price over 50 weeks. For a canned tomato sauce buyer purchasing once every three months, larger quarterly increases might be more appropriate.

The right pricing approach depends on the product, buyer behavior and margin objectives. Frequent purchases call for smaller, more gradual moves, while infrequent purchases may support larger steps—provided customer value, competitive conditions and price sensitivity support them.

Responding to Volatility

Market volatility makes calendar-based pricing particularly ineffective. Unexpected events like the 2024 Francis Scott Key Bridge collapse, which closed the Port of Baltimore, force businesses to reassess freight costs, inventory levels and customer commitments. These disruptions rarely affect the entire business uniformly—a storm in the Northeast remains a regional problem, while tariffs may impact specific categories.

Surgical pricing allows companies to respond precisely to affected parts of their business without overcorrecting elsewhere. While some companies face regulatory or contractual constraints on price changes, those with flexibility can gain a competitive advantage through targeted adjustments.

Implementing Surgical Pricing

The challenge with surgical pricing is coordinating multiple different decisions across markets, segments and categories. What turns these into a strategy rather than disconnected local decisions is visibility and proper guardrails that allow targeted decisions to coordinate rather than collide.

Companies don't need to be massive to implement precision pricing. The key requirements are understanding costs, competitive conditions and customer behavior, plus having governance with clear decision rights and the ability to execute and measure changes quickly. Without these capabilities, every price increase becomes another broad, blunt move.

When considering price increases, companies should ask what they're trying to accomplish, where conditions have changed and how customers will experience the price. The solution might be a small increase today, a larger one later, a price cut in one market or no change at all—whatever makes the most sense for the specific business need.