Companies plan to 'pass on costs' to customers 🤑

If customers can afford tariffs costs, then companies will let them pay to defend profit margins 💸

An AI-generated image of a price tag.

When the costs of goods rise, companies have two options: They can absorb those costs, or they can pass them on to consumers.

Absorbing the costs means keeping steady the prices consumers see, which can help bolster sales volumes. But it’s bad for profit margins.

Passing on the costs means raising prices on customers. It helps preserve profit margins. But it risks lower sales volumes as some customers will be unwilling or unable to pay.

Of course, companies won’t opt for just one option or the other. They’ll do some combination of both to maximize their earnings.

Lately, the message from Corporate America is increasingly about passing on costs.