From Algorithm to Transparency: How to Communicate Pricing Decisions Without Losing Trust

Dear friends,

Dynamic pricing, AI-driven algorithms, tariffs, and inflation have turned pricing into a moving target. But here’s the catch: customers now demand to know why prices move. Fail to explain, and you risk being seen as greedy - even when your changes are justified. This edition unpacks how to explain pricing decisions without eroding trust, and why transparency may be the next frontier in pricing strategy. See below.

Cool photo shared by Elisa from Naples, Italy: in her spare time, she volunteers as a sea guard, rescuing swimmers. In her professional life, she runs her family’s wholesale business and "rescues" profits from excessive discounts. "Sell value and service, not discounts – that’s what I learned from reading The 10 Rules of Highly Effective Pricing," she stated when sharing this shot. Great insight – thanks, Elisa!

Please continue sharing your shots/endorsements with the book!

In case you missed them, here selected posts:

A real self-made man: read about one of Italy's most successful entrepreneurs with a very humble origin. A great success case. Find a deep dive here.

Amazing book review: find an awesome book review of the Spanish version of 'The Pricing Model Revolution' by Eduardo Obregón here.

Book recommendations: looking for book recommendations? Find the ones of Vladimir Zaburdaev here.

Great online course on 'Research Techniques for Value-Based Pricing': join me for an in-depth online course that equips you with the research tools to craft effective, value-driven pricing strategies. Find a deep dive here.

When Prices Zigzag, Customers Lose Faith

Once upon a time, pricing was simple: set it, print it, done. Today? Your price can change by the hour - thanks to input costs, tariffs, supply shocks, and AI tools tweaking rates in real time. But when customers see prices jump overnight, they don’t think “ah, tariffs.”

Customers think:

❌ “They’re ripping us off.”

❌ “This feels sneaky.”

❌ “Time to shop around.”

Transparency isn’t just nice PR - it’s profit protection.

Why Transparency in Pricing Matters Now

1. Algorithmic Pricing Is Under Fire: Reports of “collusive AI pricing” have made headlines, raising regulatory and ethical scrutiny.
2. Inflation Burnout: After years of price hikes, buyers are hypersensitive and quick to revolt.
3. Brand Loyalty is Fragile: Trust - not just price - is a competitive weapon.

Companies like Airbnb now break down fees up-front to avoid “gotcha” moments. Others, like IKEA, publicly share raw material cost impacts on pricing.

3 Ways to Explain Price Moves (Without Apologizing)

✅ Link to External Drivers (Costs/Tariffs):

"Due to recent tariff increases on imports from China, the cost of raw materials rose by 12%. Our updated pricing reflects this reality."

✅ Show Your Work (Cost + Value Story):

"This increase supports both higher supplier costs and continued investment in [feature/value customers love].”

✅ Be Proactive, Not Reactive: Communicate before prices change. Early signals frame increases as informed, not arbitrary.

What NOT to Say

❌ “Prices are changing to remain competitive.” (Empty corporate-speak)

❌ “We’ve updated pricing to reflect market dynamics.” (Translation: algorithm says so.)

❌ “We’re sorry.” (Don’t apologize for delivering value.)

Instead: Anchor in value and facts—and show you’re not hiding the ball.

Transparent Pricing in Action

B2B Examples:

1. Salesforce: Explains price increases by tying them directly to new AI-driven features and expanded security capabilities.
2. DHL Freight: Issues cost breakdowns linking surcharges to diesel price indexes and driver wage hikes.
3. Adobe Creative Cloud (Enterprise): Publicly outlines pricing tiers tied to added collaboration features and cloud storage improvements.
4. Caterpillar: Shares raw material cost trends and tariffs in quarterly earnings and uses them to justify equipment price changes.
5. SAP: Posts whitepapers detailing how infrastructure upgrades and regulatory compliance costs impact pricing.

B2C Examples:

1. Patagonia: Shares detailed updates tying jacket price changes to rising recycled material costs and fair-trade labor.
2. Netflix: Communicates price hikes alongside investment in original content (e.g., blockbuster releases and platform improvements).
3. Starbucks: Attributes coffee price increases to global bean costs and sustainable sourcing programs.
4. Apple: Links higher device pricing to more expensive chipsets and advanced manufacturing processes.
5. Southwest Airlines: Explains fuel surcharge changes publicly, linking them to oil price movements rather than hiding them in fares.

 Your Next Move

• Audit how your pricing communications land (emails, site updates, FAQs).
• Build “pricing rationale” scripts your teams can use with confidence.
• Train sales & customer success to narrate pricing with data, not discomfort.

One Line to Remember:

If you don’t explain your prices, someone else will - and their story won’t be kind.

Question to You:

What’s the best (or worst) pricing explanation you’ve ever seen a company give?

Interested in learning more about pricing? You will find insights in the books The Pricing Model Revolution, The 10 Rules of Highly Effective Pricing and Pricing Decoded.

‘There are many books on pricing. The Pricing Model Revolution is the best read for managers wanting a review of several innovative pricing methods’. Philip Kotler, S. C. Johnson Distinguished Professor of International Marketing, Kellogg School of Management, Northwestern University

Get your copy of ‘The 10 Rules of Highly Effective Pricing’ here.

Get your copy of ‘The Pricing Model Revolution’ here.

Get your copy of ‘Pricing Decoded’ here.

You are most welcome to share your views, feedbacks and own pricing experiences. Thanks a lot for your interest and support!