THE PULSE
1. Tariffs have already hit more of your costs than you’ve probably priced for.
The New York Fed found 55% of small goods-sector firms nationally, 62% in the New York area, and 67% of small retailers report tariffs affecting their business, and about 80% of all firms said their imported input prices rose in 2025 versus 2024. Of the firms facing higher costs, roughly 80% passed at least some of it on to customers, but a full 60% are still absorbing part of it themselves. Source: Federal Reserve Bank of New York, Liberty Street Economics, July 9.
What it means for you: If anything in your product or your supply chain touches an import, the cost increase already happened. The only decision left is whether you made the call on who pays it, or you’re making it by default, out of your own pocket.
2. Half the businesses that already raised prices once are planning to do it again.
A follow-up Fed study found nearly half of firms that directly paid tariffs, 47% of service firms and 44% of manufacturers, are planning additional price increases, many staged six months or more out. The top reason wasn’t uncertainty about costs. It was reluctance to hit customers with the full number all at once. Source: Federal Reserve Bank of New York, Liberty Street Economics, July 8.
What it means for you: A staged increase beats a surprise one. If a hike is coming anyway, the businesses ahead of you are already telling you to break it into steps instead of one gut-punch invoice.
3. 58.6% of small business owners say tariffs have hit their operations, and the ones hit hardest are bracing for more.
A Small Business Expo survey of 524 owners found 58.6% report at least some tariff impact. Among the businesses reporting significant impact, 84.5% are concerned about further trade policy changes. Source: Small Business Expo Research, August 13.
What it means for you: This isn’t a one-quarter problem to wait out. The owners closest to the pain are the ones planning like it continues, and any pricing decision you make now needs to survive that.
MY TAKE: YOU THINK ABOSRBING THE COST CREATES LOYALTY, BUT IT FEELS LIKE AN INTEREST FREE LOAN.
Nobody wants to be the business that raised prices. It might feel aggressive, greedy, and the kind of move that earns you a one-star review with the word “gouging” in it (I've been there). So most owners do the opposite instead. Costs go up, and the owner quietly eats it, tells himself he’s protecting the customer, protecting the relationship, being the good guy.
Here’s what that “good guy” move actually is: it's an interest-free loan, to every customer you have, funded entirely by your own margin.
I've watched clients run this for the better part of a year before I made them stop. Input costs climbed, and they've never once adjusted their own number. They weren't being generous. They were avoiding phone calls, text or emails to customers to confront the increase in pricing. When we finally ran it, they "financed" something close to two months of their own payroll straight out of margin.
That’s the part that should bother you. A cost you don’t pass on doesn’t disappear. It gets paid. Just not by the customer. It comes out of your margin first, then your own draw, then eventually the raise your best person was supposed to get this year. Somebody always pays for it. You’ve just made sure it’s never the person who caused it.
The excuse dresses itself up as customer care, but test it honestly: is it about them, or is it about you not wanting the awkward conversation? “I don’t want to lose customers” and “I don’t want to have this call” are not the same sentence, even though they feel identical at 4pm on a Thursday when you’re avoiding it.
A few things worth sitting with:
- Silence is still a decision. Not repricing isn’t neutral. It’s choosing, by default, to keep absorbing the cost indefinitely, with no end date.
- The competitor still eating the tariff isn’t your benchmark. Whatever they’re not charging for, they’re financing out of a margin that’s thinner than yours, and thin margins don’t survive a bad quarter.
- You will lose a few customers when you reprice. You are already losing margin by not repricing. One of those losses shows up on a phone call. The other shows up quietly, every month, forever, and it never gets its own line on the P&L.
HOW TO: RUN A MARGIN RESCUE
You don’t need a finance degree for this. You need forty-five minutes and a willingness to look at the actual numbers instead of the ones you’re used to.
1. True up your real cost. Pull your five highest-volume products or services and calculate the actual landed cost today, not the number from your last price list. Most owners are pricing off a memory, not a receipt.
2. Segment before you reprice. Not every customer gets the same conversation. Separate your price-protected relationships, long tenure, high volume, the ones who refer you business, from your price-sensitive ones. The playbook is different for each, and treating them the same is how you lose the wrong ones.
3. Pick your lever on purpose. Raising the price is one option, not the only one. You can also shrink the scope, a smaller size, fewer included visits, add a line-item surcharge tied to the cost driver, or go back and renegotiate your own input cost. Choose deliberately. Don’t default into “absorb it” because it’s the only lever you looked at.
4. Write the “why” before you make the call. Customers rarely leave over the number itself. They leave over feeling blindsided. One paragraph, in plain language, on what changed and why, prepares you and them better than any script that opens with “so, unfortunately.”
5. Put a repricing date on the calendar. Quarterly, not “whenever it gets bad enough to notice.” A margin review that only happens during a crisis will always happen too late.
THIS WEEK’S MOVE
Pull your three highest-volume products or services. Calculate the true landed cost today against what you were charging a year ago. Anywhere the gap is 3% or more, make the call this week: raise it, restructure it, or absorb it on purpose. Just don’t let the fourth option, absorbing it by accident, be the one that wins by default.
Want the one-page version of this framework as a fillable worksheet? Reply “MARGIN” and I’ll send it over.
Best,
Micah
P.S. THE BROWN BOX
This issue is basically one chapter of the book in miniature: what’s breaking you is almost never where it hurts, it’s upstream, and it’s usually a call you didn’t make. The Brown Box: How to Fix What’s Broken in Your Business Before It Breaks You comes out September 8.
Preorder the ebook, and you’re invited to the virtual prelaunch book party on September 7 at 8:00 PM, the night before it goes live. We’ll get into the material, take questions, and I’ll share a few things that didn’t survive the final edit.
Preorder the ebook → https://www.amazon.com/dp/B0H2X4Z85W?dplnkId=5ceb86ba-efc7-43b3-bc15-e3c0d9f7a65e&nodl=1
Then claim your seat. Hit reply with a screenshot of your receipt and put BROWN BOX in the subject line. I’ll get your invitation out within a day.
Paperback readers: your version arrives September 8. The party invitation goes out with ebook preorders only, so grab the ebook if you want a seat.