The Problem With Waiting Too Long to Raise Your Prices

More than four in ten chief executives of the country’s largest companies say they plan to raise prices in the next 12 months, and nearly a third are already in the process. That’s according to a joint survey by PricewaterhouseCoopers and the Management Association of the Philippines conducted in July and August 2023, covering 157 CEOs. The finding reflects a broad reality: businesses across the Philippines are adjusting prices upward. But a significant number of smaller operators delay those decisions, sometimes for months or years, even as costs mount. The problem isn’t raising prices — it’s waiting too long to do it.

Why Most Businesses Start Low and Climb Up

Research from the Kellogg School of Management, led by economist Suraj Malladi, offers a clear explanation for why many businesses — especially new entrants — open with lower prices and increase them over time. The model is called “The Slow Drip of Price Increases,” and it matches what consumers in the Philippines have seen from brands like Pickup Coffee, Macao Imperial Tea, and Grab. Each entered the market with aggressive introductory pricing, then raised prices as the brand became established and demand proved stronger than expected.

The logic is straightforward: when a business doesn’t know exactly how much customers are willing to pay, starting low reduces the risk of scaring off potential buyers. Once demand is confirmed, gradual increases let the business capture more value without triggering a sharp backlash. The study notes that firms face a perceived “kink” in the demand curve — raising prices may cause a rapid drop in customers, but lowering them rarely brings those customers back in equal numbers. That asymmetry makes businesses cautious about large jumps.

This pattern is especially visible in the Philippine market. The same research notes that once a product or service gains popularity locally, prices rarely move back down. The direction is almost always upward, but the pace is gradual. For business owners, treating pricing as a learning process rather than a one-time decision is the key insight.

The Cost of Waiting

Delaying a price increase while input costs rise is the fastest way to squeeze margins. For micro, small, and medium enterprises — which make up 99 percent of Philippine businesses and contribute roughly 40 percent of GDP — the pressure is acute. Rising oil prices push up logistics and production costs, and MSMEs are particularly vulnerable to external shocks, according to Diana R. Rueda of the University of Asia and the Pacific.

Concrete examples from the research illustrate the pattern. Brian Enriquez, owner of Basket Trend Home Products, reported that logistics costs now account for 10 percent of his product price, and container costs have increased roughly 300 percent. He paused shipments to the US as a result. Salve San Juan of Golden Mama raised the price of her bottled products from around P165 to P180 as packaging costs rose with fuel prices. Martin Evangelista of Bec and Geri’s increased his purple corn coffee from P295 to P350 to offset rising delivery expenses. In each case, the price increase was reactive — forced by circumstances rather than planned strategically.

The problem with reactive pricing is that it tends to be larger and more abrupt than a series of small, planned adjustments. A customer who might accept a P5 or P10 increase spread across six months is more likely to balk at a P30 jump all at once. The same psychology that makes gradual increases work — the “slow drip” — also makes delayed increases risky.

What Changes When You Move First

The CEO survey offers a useful contrast. The 30 percent of top executives already implementing price increases are acting ahead of the curve, not behind it. They are responding to the same inflation pressures — which averaged 6.8 percent in the first seven months of 2023, according to the Philippine Statistics Authority — but they are doing so on their own terms. PwC Philippines chairman Roderic M. Danao noted that price increases are expected for consumer goods, especially those with grain components, partly due to Russia’s withdrawal from the global grain deal. The external factors are well-known; the difference is in timing and execution.

NEDA Undersecretary Rosemarie Edillon explained that inflation remains stubbornly high because some sectors have not recovered pre-COVID levels, creating an uneven recovery. When the economy fully reopened in October 2022, “revenge spending” from those with savings and steady income pushed demand up, while micro and small businesses had yet to stabilize their balance sheets. That gap between demand and supply drove prices higher. For a business owner, this context matters: waiting for “normal” conditions to return before raising prices may mean waiting indefinitely, because the post-pandemic economy is not returning to a pre-pandemic baseline.

There is also a competitive dimension. When a competitor raises prices first and manages the transition smoothly, they set a new benchmark. Customers grumble, then adjust. The business that follows later faces the same customer resistance but without the benefit of being first to reset expectations. In practical terms, the first mover in a price increase within a market segment often faces less individual scrutiny because the entire category is repricing.

How to Raise Prices Without Losing Customers

The research suggests a clear alternative to waiting: treat pricing as an ongoing process, not a single decision. The “slow drip” model works because it mirrors how customers actually adapt to price changes. Small, predictable increases are absorbed into routine; large, surprising ones are not.

• 1
  Benchmark Your Costs Regularly

  Track input costs — logistics, raw materials, packaging — at least quarterly. When a key cost rises by a consistent percentage, that’s your trigger for a proportional price adjustment, not a reason to wait and see.

• 2
  Plan Small Increases on a Schedule

  Set a cadence — for example, a 3–5 percent increase every six months — rather than reacting to cost spikes. Customers who see a pattern of small, predictable adjustments are less likely to shop around than those hit with an unexpected jump.

• 3
  Communicate the Change Directly

  Explain the reason in plain terms — rising logistics costs, higher input prices — without apologizing. Businesses that frame a price increase as a necessary adjustment to maintain quality tend to retain more customers than those that stay silent and let the increase speak for itself.

• 4
  Monitor Customer Response and Adjust

  After each increase, watch for changes in order frequency, average basket size, or repeat purchase rate. If demand holds steady, you have room to continue. If you see a meaningful drop, pause and assess whether the increase was too large or poorly timed.

For businesses operating on thin margins — which includes most MSMEs — the cost of waiting is not just lost profit. It is the erosion of the ability to invest in quality, staff, and growth. The 79 percent of CEOs who said they remain positive about revenue growth despite high inflation are not ignoring the pressure. They are pricing through it.

Frequently Asked Questions

What to Watch For Next

The window for proactive pricing is always open, but it narrows the longer you wait. The businesses that navigated the post-pandemic period with the least disruption were those that adjusted early and often, treating price as a variable they could manage rather than a number they set once and hoped would hold. If you are running a business in the Philippines today, the question is not whether you will need to raise prices — it is whether you will do it on your terms or wait until the margin forces your hand.

If this was useful, you might also want to read how to secure funding for small and medium enterprises.

Sources

Bad advice that hurts small businesses — Common pricing and strategy mistakes that hold back Philippine entrepreneurs.

Old ways that hurt progress — Why traditional business practices, including rigid pricing, limit growth.

Why prices in the Philippines often start low then gradually rise. Financial Adviser PH, 2023.

As costs bite, CEOs ready price hikes. Philippine Daily Inquirer, 2023.

Why Philippine inflation is still high, NEDA explains. Philstar, 2025.

Anatomy of rice prices: P20/kilo remains Marcos pipe dream. Philippine Center for Investigative Journalism, 2025.