The Financial Fallout of Trump’s Tariffs for Pricing Teams with Karan Sood
In this episode of Future Finance, host Paul Barnhurst (aka The FP&A Guy) welcomes Karan Sood, a global pricing expert with over a decade of experience in revenue management and pricing strategies. Karan shares his knowledge on the impact of tariffs on global trade and pricing models. He talks about the complexities of tariffs, offering advice on how businesses can effectively manage the financial implications and adapt their pricing strategies during these uncertain times. Karan discusses the importance of collaboration across departments and creating flexible models that can quickly adjust to changing market conditions.
Karan Sood is a global pricing expert and the Director of Sales Operations with a wealth of experience overseeing revenue management for over $6 billion across a wide range of industries. He is passionate about using pricing as a powerful tool to drive profitability and improve business performance. Karan has worked across industries including automotive, digital marketing, consumer goods, and more, developing pricing strategies that create real business value.
Expect to Learn:
How tariffs impact different industries and pricing strategies.
Why a one-size-fits-all approach to tariffs is flawed and the importance of tailored strategies.
The role of cross-functional collaboration in managing tariff impacts.
How to create flexible pricing models that can quickly adjust to shifting market conditions.
The importance of transparency with customers when adjusting prices due to tariffs.
Karan Sood shared meaningful strategies for managing the complexities of tariffs in today’s global trade environment. His advice to stay calm, work collaboratively, and prioritize flexibility in pricing models is invaluable for finance professionals looking to navigate the challenges posed by tariffs. By emphasizing the importance of cross-departmental communication and transparency with customers, Karan offers actionable steps that can help businesses succeed in a volatile market.
Follow Karan:
LinkedIn - https://www.linkedin.com/in/soodkaran/?originalSubdomain=ca
Website - https://substack.com/@karansood
Follow Paul:
LinkedIn - https://www.linkedin.com/in/thefpandaguy
Follow QFlow.AI:
Website - https://bit.ly/4fYK9vY
Future Finance is sponsored by QFlow.ai, the strategic finance platform solving the toughest part of planning and analysis: B2B revenue. Align sales, marketing, and finance, speed up decision-making, and lock in accountability with QFlow.ai.
Stay tuned for a deeper understanding of how AI is shaping the future of finance and what it means for businesses and individuals alike.
In Today’s Episode:
[02:08] - Introduction of Episode
[03:05] - Karan’s Journey into Pricing
[06:45] - The Global Impact of Tariffs
[12:05] - Why One-Size-Fits-All Doesn’t Work
[16:00] - Managing the Impact of Tariffs
[20:04] - Building Flexible Pricing Models
[23:09] - Transparency with Consumers
[28:46] - Short-Term vs. Long-Term Strategy
[34:34] - Cross-Department Collaboration
[39:06] - Book recommended by Karan
Full Show Transcript:
[00:02:08] Host: Paul Barnhurst: Hello, everyone. Welcome to the special podcast episode. This episode is going to be released on all three shows FP&A tomorrow. Financial Modeler's corner and Future Finance because we're discussing a topic that I believe is topical and very important for every finance professional today. It's something we're all dealing with. We're all scrambling to try to figure out. And that's tariffs, as many people know April 2nd. President Trump in the US declared it Liberation Day and applied tariffs pretty much globally. Some of those have now been put on hold for 90 days. Some have even been increased. But we're just seeing a ton of volatility in the market and everybody is trying to get a handle on that. So I've brought in a friend of mine, global pricing expert, who's been doing a lot of work around tariffs. Karan sued Karan. Thanks for joining me.
[00:03:02] Guest: Karan Sood: Thanks for having me. Always a pleasure.
[00:03:04] Host: Paul Barnhurst: Yeah, I'm really excited to have you. So I'll give a little bit about Karan's background and then we'll jump into things. So Karan is a global pricing expert who today works as the director of sales operations. And this is what he has to say about pricing, in his own words from LinkedIn. I really like this. He goes, most companies make pricing an afterthought. Most companies are also never able to use pricing as the superpower it actually is. He's had the privilege of overseeing revenue management for over $6 billion in revenue across a diverse range of industries over the past decade. Through this experience, he's gained a deep understanding of the critical role that pricing plays in business success. He is passionate about sharing his expertise and insights to help organizations harness the power of pricing strategies to improve profitability and overall performance. So first question I want to ask you here. I know you love talking about pricing. I even noticed you called yourself the pricing guy on your LinkedIn profile. So we have the fat guy and the pricing guy. But how did you develop such a passion for pricing? How did that end up being your specialization? Because that's not an area most people specialize in.
[00:04:15] Guest: Karan Sood: No, I didn't even know something like this exists. You're not taught this in business school. I did my engineering and did my MBA after that here in Canada. And honestly, it was not something. And like we knew nothing. There was pricing was four pages in a book in marketing. And that was pretty much it. I didn't think I would cross paths with it again, but somehow I stumbled in my first job when I was a good job. Somehow I stumbled on this pricing role. I was going to choose between 3 or 4 roles, and I got assigned pricing in that team, and I didn't know what to make of it. I'm like, okay, that's when we'll start doing it. And then over time, then you started to build the knowledge and you started to build connections, and then you switched from one industry from automotive to digital marketing and you do a different kind of pricing. And then I moved to CPG and did a little bit something different than electronics and SaaS in between, etc.. Then I started to do all this all around thing, you know, this personality around pricing where like if someone had a pricing question because I'd been around so many different models and so many different industries, and it probably has seen almost everything you could throw at me for from a pricing point of view, from exec pushback to buy in to creating models to creating pricing, design and financial analysis and so on and so forth.
[00:05:30] Guest: Karan Sood: So it just became a thing where I'm like, okay, it's something I was getting good at. And then it started to become this niche. And then when I realized that there are people who want to listen to more about this and want to learn more about it, then I started to be more vocal around this in the pricing community. And honestly, it's helped me grow my skills and I think it benefits everyone. But it's pretty much been. And once I realized that, you know, you can actually make hard dollars for companies doing this and being more creative with it. I think it benefits as well. So then you can measure your impact directly like, hey, you did this, you created this strategy and it made so much, so much money. So it's then it's easier to buy into this pricing vertical for me at least internally. And yeah, that's how I came into pricing and stayed almost so cool.
[00:06:23] Host: Paul Barnhurst: And you know, I know we'll be leaving pricing into our discussion. But before we jump into things around pricing, I want to talk a little bit about tariffs, because I've seen a lot of, uh, activity from you on LinkedIn. You've dug pretty deep into what's going on here, you know, from the US on these, you know, worldwide tariffs, some countries that we've seen as much as 100%. So maybe can you start by sharing your initial reaction to all this tariff talk we've been dealing with the last month or so? I think it's really kind of exploded since President Trump became president of the US again. And that was part of his core policy. So what's kind of been I know you're Canadian and so you're not you're not directly in the US, but this has clearly impacted Canada. So give us kind of your perspective as you watched all this unfold.
[00:07:08] Guest: Karan Sood: You know, you sort of have to go back and sort of go back to where it all started. Right. Like tariffs are always and always taxed to sort of incentivize behavior within the country or even externally. So within the country, like President Trump or anyone in that position wanted a change in behavior in his consumers that buy almost like buy local and not don't buy foreign. And that's the real incentive. And you know, you can position that as protectionism or, or patriotism or whatever you want to position it as. But it sort of is for that behavior. Now, how you grow that behavior in a truly global environment now, where tariffs were not something we used to think about is is key. And now, you know, you could say that you could be very surgical. You know, any strategy like this, you could be very surgical where you figure out, okay, what do I exactly need to grow and how which country is exporting that item so that I can actually grow that domestically? For example, let's say auto if some if someone said, hey, I want to grow the domestic auto sector. So I'm going to restrict, you know, vehicles coming from Canada for example, or Mexico, uh, that would be a more surgical thing.
[00:08:24] Guest: Karan Sood: And that was the first phase of this very surgical project like lumber and auto and steel and aluminum, which was very targeted, very targeted to certain countries, very targeted to certain geos, uh, and industries. So it made sense that, okay, you're adding this. Now, obviously the impact of that is going to be that prices are going to go up depending on how much tariffs are like, there's an expectation that when the tariffs come into play the prices are going to go up. Sometimes there's not enough margin in the entire value chain to absorb a 25% increase in cost, and then distributors are working with 4%. There's manufacturers working with 10%, and especially in commodities like, which are easily replaceable. You know, margins are razor thin sometimes. So they get passed on to the consumer. But then from that very surgical phase, we quickly went into this phase where it was like a blanket across the board, tariffs across so many countries based on a form. So when it first came out, when, you know, it came out on, on the, you know, is it the rose garden with a big, you know, with a big chart.
[00:09:29] Host: Paul Barnhurst: And the big, big board that he had when he celebrated liberation. I was on vacation. All this happened.
[00:09:35] Guest: Karan Sood: Yeah. So I saw that. Then I went to the Department of Trade website and you saw the formula that was used. So at first when I looked at the formula, I'm like, hey, that makes sense. I guess there's a method to the madness in a way that is how it was calculated. But then slowly and slowly you realize that some a lot of vague assumptions were used in that, in that formula, in a way that it assumed certain elasticity of goods for import that is assumed. For example, the elasticity of imports is four, which basically means that a 10% tariff will decrease demand by 40% almost. But there also, in the same formula, assumed that only a quarter of the tariff cost will be passed on to the consumers so that that elasticity and that pass through sort of cancel each other. They said, okay, this cancels this, so there's no net impact. And then the formula is basically the trade deficit divided by the imports, which basically is how much surplus are you sending us versus our imports. And then just calculate a tariff based on that. So I mean if you would if someone was doing it right, and if that formula held its weight, you would use the right assumption. They used the assumption that only a quarter of the tariff cost will pass to the consumer, rumor which in actuality is not correct. Most companies will pass on the hike the entire cost to the consumers. In fact, the people who sort of wrote the research for it originally said that 90 to 95% of the costs will be passed to the consumers versus the expectations in US, which were like 25%. And that's the reason everyone has been working overnight since the last week, trying to figure out what is the tariff, how much it is, who do we pass it to, how much can we absorb, and how much runway we have? So I think everyone is trying to figure out the same thing right now.
[00:11:28] Host: Paul Barnhurst: I would agree with you. Right. Everybody's trying to figure out, okay, what does it mean for my business? What's the runway. What's the short term? The long term. How much can I absorb? How much can I pass on to the customer? Because it's going to be different for different products, right? If we are importing pretty much 100% of that product, you better believe it's going to be close to 100% price increase. But if we produce quite a bit inside, then the other ones are like, well, we can't pass as much on to the customer, or they're not going to buy us anymore unless there's demand for it or if it's a luxury. Good. So, you know, as I think about this, I think almost. Every business is slightly different assumptions. Even though with this tariff, they used the same assumptions across the board with all these commodities, which to me and correct me if I'm wrong, from what you're saying, that seems really flawed. Like there just seems some assumptions here that are really hard to support on a a massive level and say this is going to happen, right? Is that what I'm hearing from you?
[00:12:27] Guest: Karan Sood: And you're absolutely right that every industry is different, for example. And you also, like every industry is different. And you need to have the extra demand inside the country. For example, lumber, for example. If US does not have enough supply of lumber internally, then there's no amount of not taxed. Like if even if you, you know, put the tariffs on and you train people to buy domestically. What happens is, is there's just more people chasing less domestic goods again. And then what that does is it raises the price of those domestic goods again, because they're like it becomes more dearer in a way. So that sort of has that knock off inflationary impact on prices that is coming from tariffs and also just from organic demand for those same products internally. So it is different. And then and you said and also you pointed out like luxury goods and luxury goods are very, very tariff and inflation independent. You'll see that even during the pandemic, some of the biggest runners and the best industries to be in was the top end luxury. And that's why even, um, I can't remember his name. The richest guy in the world for a little bit of time was the French, you know, retailer of high end brands. I think it's Louis Vuitton, the owner of Louis Vuitton and all those brands. So it's because these are very inflation resistant. So for them, a 10% really doesn't. If you want to buy a, you know, half $1 million yacht like another 50 K is not going to break the bank. But if you're going to be buying a $6,000 iPhone and if certainly that's got 85% tariff on it, that becomes meaningful from 1000 to 1500 or 1600.
[00:14:10] Guest: Karan Sood: And that's where the math starts to break out for a lot of consumers, for a lot of companies selling, a lot of consumer is do I need this? Then for the sellers, it's like, hey, what percentage can the manufacturer absorb, what percentage the middleman absorbed, and what percentage the actual retailer absorbs? And I think this is the math everyone is trying to figure out right now. So if you are in a finance team or in a pricing team, I think this is in my way, my thinking, at least your Super Bowl in a way, and you're trying to basically figure out with the sales team and your supply chain team and your and your finance teams as to, hey, what is the breaking point? And I think the breaking point has been reached like a random model for most industries. No one has 104% margin on like, you know, you can't have it technically, but also like no one has that high of a margin on their products where a tariff as high as 100% or 150 or 180% can be observed. So the model is already broken now, and every company has likely already made a decision. Now the question is when are they going to start acting on it? Because, uh, the analysis is the same, whether it's 100% tariff or 120% tariff or one 5,954% tariff. I think now as of an hour or two hours, two hours ago. So, you know, it's it's I think the decisions are made already. I feel like.
[00:15:34] Host: Paul Barnhurst: Yeah. And I agree with you. Right. I know us with China, the 104% that you mentioned on the goods there, that there has to be a price increase for goods coming from China, you know, yes, I know they want to get some production back in the US. But that's not an overnight thing for most of the stuff we get from from China. As an example, in the US or, you know, take whatever countries it is. So what are you advising kind of companies to do to help manage these tariffs? I get what the US is trying to accomplish. They're saying, hey, look, we want more domestic production. We want to protect our industries. We want to bring back some manufacturing long term. We'll see how that plays out. But in the short term, what are you advising kind of companies to do and how should they start thinking about this? Obviously they should have already been thinking about it, but if they haven't done much yet, what would you tell them?
[00:16:28] Guest: Karan Sood: There's a general understanding, right? Like a lot of times the general understanding is that, hey, businesses are efficient. If they knew there's a way to save money in their supply chain or in their or in their product costs or in their sourcing, they would have done it by now. But that doesn't really happen. A lot of times we know that the business could be run a little bit more efficiently, or the cost could be a bit lower. We don't do it for several reasons. Because why? Why change something that's not broken if your business is generating money? It's generating margin. It's generating shareholder value. A lot of times people don't want to change it. They don't want to optimize their product or their costs or their supplier or their location. Like, there's no incentive, for example, for Apple to go from manufacturing in China to manufacturing in the US. When you're selling millions and millions of iPhones already, or changing them from China to some other country in East Asia because it's working well. And why change something that's working well? A situation like this is sort of like that catalyst. So I think my advice, first of all, for most teams, finance and pricing and people in adjacent sites sort of skills and you know and the department says that I think now is the time to assess everything. What cost impacts are you going to have? I think there's a lot of lack of clarity. And I think right now you have to make sure that your models are flexible versus being agile. A lot of people are like, hey, I want to get the best pricing model and the best price change, etc.
[00:17:59] Guest: Karan Sood: out the door now. But guess what? Whatever you try to push out the door yesterday, start working at 5:00 pm yesterday and now it's going to work 11 a.m. today. So take pause. Figure out how much you are really impacted? Because that's not an easy question to answer. There's a lot of ambiguity when they say tariffs are 145%. They don't tell you the exact specifics of which country, which geo or what product is excluded or what not excluded, and how it's calculated. Is it calculated on the absolute value of the product, or is it based on some parts that are or some parts are getting tariff? So there's just a lot of nuance that the first and foremost is to work with your legal team, to work with your supply chain team, and work with your finance team to basically figured out what exactly is the dollar impact. Then you got to go into the mode of figuring out, okay, how much of this cost and for how long can I absorb what is if this is a trade war, how much ammunition do I have right now? And that's basically, you know, how much money have been made so far. How much you're going to make these products is what is the alternative to doing this. What is the alternative to doing this? Is that not selling at all or or erasing pricing going to almost nothing? I think there's that trade off. People need to start weighing in now. And that trade off only comes when you're really working cross-functionally to figure it out and not working in isolation.
[00:19:29] Guest: Karan Sood: In isolation, this becomes very easy. Finance could just say, hey, you know what? There's just so much loss. You're not going to do it. But if you go back and look at it strategically and say, hey, is that the right decision to make today? Because you have accounts you want to fulfill, sales channels you want to make sure the sales conversations are or customers you have a contractual obligation to, or you want to use it as a marketing ploy for yourself. There's just too many things there that it's not a binary decision as of yet because it's changing constantly. What's true today and what may be a decision to turn down and turn off your tasks today, might change into something tomorrow. And then you have a totally different you might have a totally different strategy. So I think pause, work, cross collaboratively, and then figure out what the pricing strategy for you is going to be for this. Are you going to absorb costs? Pass on costs. Is it a hybrid approach? And what is the timing of that thing. Because people say oh raise prices. But guess what? Most contractual agreements anywhere in North America will have clauses for 60 days, 90 days, 120 days, and even like almost 12 months of contractual obligations or volume obligations that, hey, this volume is being bought at this price and nothing else? No. Nothing else. And it's very hard to pass on those ones. So you need to gather all that information as well. And then just getting alignment from stakeholders.
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[00:22:01] Host: Paul Barnhurst:So what I'm hearing, and I think this makes sense, is that the first thing you got to do is make this a cross-functional exercise. There's no one department that should be doing this. There's going to be legal involved. There's going to be finance. There's going to be supply chain sales and start by okay. What's the cost impact to my cost of goods sold? Which areas does this apply and how much.
[00:22:24] Host: Paul Barnhurst: And you know trying to get into that nitty gritty and making some good assumptions. Next I'm hearing you're going to need a really flexible model. You're going to need to think about how you build a model in such a way that you can quickly adjust things and see different scenarios and ranges, because this is all unfolding in real time. You know what? What was in place two days ago isn't what is in place today. And we'll see what tomorrow is. Because every country is managing this different. We have different leaders. This is a global thing. It's not like, hey, we put them in place and we're done. And so if I'm hearing it that you start with those kind of, you know, those things are cross-functionally get everybody together, dig through and understand this, have a flexible model, understand your runway. How much inventory do you have? What do all your contracts look like? How much cash do we have on hand? What can we borrow? And so really it's kind of almost a health assessment from a company standpoint, a deep assessment on your supply chain and your crop, your cost cross-functionally before you then start to get to the strategic of how do we manage this.
[00:23:33] Guest: Karan Sood: This, this notion of these are all like whatever we discuss are all I don't want to say they're short term, but they're all short term and medium term changes. And the long term changes coming out of this are going to be totally different, where you're probably rethinking everything on what countries you sell to, what countries you partner with, what countries where your suppliers are, where you manufacture. Like it's there's going to be more nuance to it than on the long term. And which will go into bigger considerations. Like for example, Apple is saying they're going to have a 500. They're going to invest 500 billion into US facilities for phones and servers and so on and so forth. That's a long term play. Will that have any impact? Now no. But you know, things like this will spin out of it. And that's the kind of broader strategies and broader, bigger play that will come out of it.
[00:24:22] Host: Paul Barnhurst: Yeah. I'm hearing there's the short term, the immediate what do we do in the next 30 days, 60 days, 90 days. There's the midterm. What does this look like six months a year, maybe two years? And there's that longer term. What's the strategy for five years? I think it is a great example. You may have seen this Jaguar Land Rover. You know, they immediately said, look, we're not shipping anything to the US. They paused all shipping to the US and said, hey, we have some inventory there. We're going to take time and figure out what our strategy is so short term. They said, we're not going to deal with it, whether that's 30 days or 60 days. We'll see. You know, Ford took the approach and said, we're going to give everybody employee pricing as a way to try to move inventory. And so it's really interesting to watch, because we're starting to see reactions from companies that short term and the long term, like you mentioned, some of them are saying, hey, we're working to find ways to bring more stuff into the US or, you know, to basically some markets are saying, look, we're just going to ignore the US goods altogether. I know some countries have had protests where they're saying we're not going to buy us goods anymore. So you have the company response, you have the government response in this, and you have the consumer response.
[00:25:29] Guest: Karan Sood: Is this going to be all this? There's a lot of pride and nationalism and patriotism that comes into play when it's in the country that play. You see that in Canada for obviously as well a lot. So that will come into play. And how do you use that to your advantage? Like, you know, companies like Ford are using it to their advantage because they're, you know, the timing is right. And, uh, yeah. And Jaguar's making the right move. And I think that's the calculated move. Right? Like someone figured out and said, hey, it's not beneficial for us to sell and import vehicles in the short term. We'll sell the runway. The runway that they had for how many months or weeks will do that. And, you know, and we'll go from there for 4 to 6 weeks.
[00:26:12] Host: Paul Barnhurst: Yeah. And I'm sure they'll look at it and say, okay, these are cars that are, you know, because they have some luxury stuff that are very price insensitive. We'll continue to send those and just pass it on these other ones, maybe you'll see some discontinued. It's just it's so fascinating to me. You know, one thing somebody does can kind of just upset the entire apple cart and everybody has to scramble. I'm trying to think of a comparison in my lifetime to this Covid in a different way. We all had to scramble. But this is in many ways Anyways, it was a known event, but kind of Black swan in the sense of nobody really understands the full impact or what this is going to be like for everybody. We have ideas, but it feels like there's a lot of uncertainty. True.
[00:26:53] Guest: Karan Sood: I think the only one that probably remotely mimics that to an extent is the financial meltdown from 2008, for example. That's like where people like, didn't know. Like they knew. Okay, so markets are responding this way or or or the bigger banks are going bankrupt. But they didn't realize the scope of the amount of impact it has on the housing market and the job market in years to come, and people's pensions and so on and so forth. So I think that's probably the only other comparison I can think of in terms of the scale of how it's impacting people, and it will continue to do so. And you see, you know, you see it in the stock market again today. So it's yeah.
[00:27:34] Host: Paul Barnhurst: Yeah. And how do you think companies come out of this as a winner from a pricing perspective. What's what's your view on kind of the smart way to pass these prices on, because there's a lot of different ways to message it to choose how much to price. I mean, if you were advising a company and you could pick an industry, kind of walk me through how you would think about the actual, you know, doing those price increases in a way that, you know, puts you in the best position kind of moving forward.
[00:28:02] Guest: Karan Sood: Yeah, I think.
[00:28:03] Guest: Karan Sood: It comes down to figuring out what your pricing power is. And generally I think if I, if I were putting a framework, I would say, hey, what's your pricing power and who is your competitor. Um, and or the level of competition you see in this industry. So if you are in a unique industry that's making something unique and, you know, it may be iPhones or whatever, you know that you have a really good pricing power. For example, you know, Apple and Samsung and these guys have really good pricing power, and they're in a very unique situation. There's only like a handful of manufacturers. So guess what? For them it's going to be an easy decision when it comes to tariffs and say, hey, we're going to pass the tariff cost to the consumer to the point that it can bear. Now, what it can bear is something, if you are a pricing and finance team, there's probably enough research out there or you can do more. You can do research on your own product. You know, which we sometimes do when pricing and finance teams don't do enough of is like what is the elasticity of this product in a way. I think you're going to need to test that to really figure out what the next price points are going to be. And um, so there's that. And then, uh, so the pricing power is a big element of it.
[00:29:14] Guest: Karan Sood: Like if you have pricing power, you have some control over your pricing of what you want to do. And if you have no pricing power, if you're easily replaceable, then I think you've got to figure out in the next little while what the differentiator is going to be for people to choose you in these times. So, for example, if you are, uh, if you are just, uh, like a more generic car manufacturer, let's say if you are Kia or Hyundai. Not that they are generic or they're really good cars, but for example, they will have alternatives for those where people can go, okay, you know what? I can just buy the alternative because that's pretty darn good for is pretty darn good, or Chevy is pretty darn good. So so I think in those they really have to figure out what this, what the mechanism they're going to layer on top of this to basically entice people to buy. Is that a long maybe is something to do with a service plan, or it's something to do with where you bundle something on top of it. You got to incentivize in certain industries, you will have to incentivize the customer to purchase, uh, because that's the only differentiator you have versus versus the competitor. So I think if I would take a really long, hard look at what your pricing power is, and if you have pricing power, you gotta you gotta pass on the increases as much as you can.
[00:30:26] Guest: Karan Sood: And it's almost like, you know, if you're building a model, it's like, hey, what the price needs to be. If I was to just pass on the entire tariff to a consumer, if it's like 50%, 60% 50% of the cost. What is the price point based on that? What is the price point based upon what I can do because of contractual limitation. And third is what can I get away with? And somewhere between those three options is your new magical number, where you will probably price higher and sell less. I think we have to work with the reality that you will be selling less for a little bit in between, so you got to get your war chest ready in terms of how much you what you had to to be able to afford it, and then you also got to look at what your what changes you're going to make. Are you going to cut out if you are like a retail product, are you going to cut out your promotions? Are you going to cut out your marketing spend? Are you going to cut out headcount like this is going to be painful decisions you will have to make in this to be able to get out of this if you are deeply impacted by it. And I think those things will need to start happen starting now.
[00:31:34] Host: Paul Barnhurst: Got it. Now it makes a lot of sense. A lot of this goes back to econ 101, so to speak, in the sense of elasticity and understanding your pricing power. And it a lot of it is so much about understanding how much ability do I have to pass these costs on? If you have zero ability then it's is there anything I can do to differentiate and what can I take out of the supply chain? If I could pass on 100% with no problem, there's not a huge incentive to be a lot more efficient. You probably should be just because that's good business, but there's not necessarily an incentive here. So I really like how you're making it very clear that, look, every business is different. There's some similar things you have to do. There's exercises you need to go through. But there's no magic silver bullet here.
[00:32:18] Guest: Karan Sood: No, no. And one last.
[00:32:19] Guest: Karan Sood: Thing I would say is also be transparent with the consumer at this point. I mean, you know, there's two schools of thoughts here. One is that, hey, that hey, change the price of the product and let it rip in the market. And consumers will respond accordingly if they see the price point is right or not. And there's another school of thought that says, hey, price of the product is what it is, because what you're really paying higher for is this tariff or levy, this import levy, then put that as an additional line item so people understand the difference between what was the price of the product and what I am being asked to pay for, you know, for the import or for various reasons. And then they make a decision. I am more in the second camp because I feel like you need to give people the transparency in most places, that here's the cost that you're you're you're absorbing, we are absorbing or you are paying for this. And then you can, you know, it's better than no transparency at all. At all. Because then it's a bit like, because people know that if prices go up, they rarely come down. And if you bake it into the price of the product, that transparency is lost versus when it's this and it's very common in B2B and like in, in, like raw material manufacturing in earth metals and all these places where they just add a line item for the tariff which can be taken out, added back in, or increase or decrease as they want without changing the price of the product per se.
[00:33:42] Host: Paul Barnhurst: Well, it's like I mean, you look at cars as an example and there's almost always a destination fee, right? So you can see okay, here's their MSRP suggested price. Here's the destination. You can add a line that says here's kind of the tariff for whatever you want to call it. So I tend to agree with you. I do appreciate the transparency. I think that's best for the consumer and it can win you a lot of loyalty. Unfortunately, sometimes people like the lack of transparency because as you said, when prices go up, they rarely come down. I would expect when these tariffs go away, that we're going to see a decrease in inflation for the amount of the tariffs, some percentage of that is just going to remain in the price. And so I'd love to get your thoughts. Do you think talking the big picture. And I realize none of us have the answers. But do you think this is going to lead to a global recession? How should we as individuals kind of think about this and prepare ourselves? We've talked a lot about financing companies, but any advice, you know, kind of just from your perspective or thoughts of how we as consumers should think about all this?
[00:34:43] Guest: Karan Sood: If anyone had had a crystal ball to tell where this will lead, I think that would be a very good thing to have. But the thing is, I think, I think there's a lot of unknown trade wars do end is the end in sight? I'm not sure at this point. This has become a little bit of a signal and anchoring and and show of strength, because 150% tariff is, is more of a signal. It's not a number. No one's going to make money out of it, because exports are just going to drop by the same amount in a way. So it's more about signal. And I think there's still a lack of clarity around where this will end. But I think if as a consumer, I mean, you're already seeing the frenzy out there. People know if you're going to need an import product right now, the time to buy it. If if you are in a position that's basically where you can afford it, and it's something that people are taking into account. And that's why the electronic scales for iPhones, etc. are booming right now, because iPhones become the new toilet paper from Covid that people are like, okay, this is going to go up in price.
[00:35:46] Guest: Karan Sood: So they've already there's all sorts of analysis online on how here's how much the price will increase by because of tariffs, etc., and people are just banking on it and jumping on an opportunity. So I don't know that that's the only thing I'm seeing. But yeah. So I don't know. Outside of that, there's no way to tell when this ends. And what are the strategies you can employ for yourself? I think you just have to make the best decision for yourself based on the circumstances of where the prices are, where you're importing, what the alternative is going to be, and just make a decision accordingly. And during Covid, a lot of private label brands benefited because people were like, hey, prices are too high for some of these items that are branded. I'm just going to go private label. I mean, private label benefited from that. So it's just another way how people make decisions around around pricing and spending etc..
[00:36:32] Host: Paul Barnhurst: You know, I'm hearing is really being being educated really kind of, you know, and making trying to make smart decisions as best you can. But as you said, if anyone had a crystal ball, please let me know, because I can make a lot of money in the market with you. We can we can go in together, right?
[00:36:47] Guest: Karan Sood: 100%.
[00:36:48] Host: Paul Barnhurst: All right. Well, we have just a couple minutes left. I want to ask you just a couple questions to get to know you a little bit more personally. This is kind of a fun section we've had we've talked quite a bit about tariffs and pricing. And so first one I'm going to ask if you could have any superpower and a little fun here. What superpower would you pick.
[00:37:06] Guest: Karan Sood: Travel like brought myself from one country to another country and like do some like you know see the world would probably be a good one.
[00:37:16] Host: Paul Barnhurst: So basically like being able to teleport, so to speak. Like I could just go to Turkey and in a blink of an eye.
[00:37:21] Guest: Karan Sood: Yeah. Teleport. Yeah. Teleport. Yeah. I can just teleport myself. Uh, yeah. So that would be a nice superpower. Rolling back years would be nice. Like, you know, the as you get older, you get nostalgic about the things you have done and not done and you're like, you know, that would be nice. But yeah, those two will probably be the two worlds I would love to have.
[00:37:39] Host: Paul Barnhurst: I like it. If you could have any job in the world for one week, it could be a specific industry or person's job. What would you pick?
[00:37:49] Guest: Karan Sood: Ah, that's a tough one. Yeah. That's a that's actually a really tough one. Like I feel like I want to work in like if I, if someone said, hey, you can work in again. Goes back to like many, many years ago, I interviewed for Fedex. And one of the perks of being at Fedex was that you could be a standing, you have standing reservation. You just had to show up at the airport. I'm like, that would be a nice perk in industry to work in. So maybe that is the kind of role you want to be in for some period and say, hey, this is how it feels to be like, you just hop on a plane and go somewhere.
[00:38:21] Host: Paul Barnhurst: I think someone has the travel bug.
[00:38:24] Guest: Karan Sood: Yeah, I'm going to probably think about that a little bit more as I go walk away from here as to say, hey, is there something that I probably would have loved to do? I'm sure there was.
[00:38:32] Host: Paul Barnhurst: Right. Last question what's kind of your favorite hobby or passion? What do you like to do in your spare time other than read, you know, economic tariff things that are put out?
[00:38:41] Guest: Karan Sood: Yeah, I mean, honestly.
[00:38:42] Guest: Karan Sood: I read a lot, but yeah, I would default to like, I just I'm a ferocious reader, so I'm just reading newsletters or I'll read books and read. I don't listen to a lot of stuff. I don't watch a lot of TV. It just doesn't. The schedule doesn't allow. But I just love spending time with my family. I love to spend time with my daughter. That's probably the other thing that I do a lot of.
[00:39:02] Host: Paul Barnhurst: So family and reading.
[00:39:05] Guest: Karan Sood: Family and reading. Yeah.
[00:39:06] Host: Paul Barnhurst: Any book you'd recommend to our audience? Is there a book out there that you think we should be reading?
[00:39:11] Guest: Karan Sood: Yeah, I would just.
[00:39:11] Guest: Karan Sood: Done the book. One book I think everyone should read is the Robert Cialdini Is the Art of persuasion. I think it's a book that everyone should read. Like everyone, it tells you how to do. It basically tells a lot about human behavior, how you convince people to do stuff for you, how you basically you model the kind of behavior in people like you? How do you incentivize people to towards you, etc.? It's just it's an all round good book for anyone to read, regardless of any industry. You know, the Art of persuasion is a must read book. Talks about different tactics on how to, you know, gain authority and how to gain confidence and how to gain, etc. it's an all round good book for people to read.
[00:39:54] Host: Paul Barnhurst: Great. I've heard a lot of great things about that, and I know the art of persuasion is so important, so that's a great one to mention. Kind of last question. If someone wants to learn more about you or get in touch with you, what's the best way for them to do that?
[00:40:06] Guest: Karan Sood: Obviously, you know, I am very active on LinkedIn so that you can just find me on LinkedIn. I have a newsletter as well that they can subscribe to. It's called Pricing Tribe. I talk about all things pricing, discounting, careers and pricing, which is very adjacent to almost pseudo finance in a way that, you know, pricing and finance are very closely related. So, you know, you can find me on LinkedIn, you can find my newsletter. And yeah, like I would love to chat with anyone and everyone.
[00:40:31] Host: Paul Barnhurst: I appreciate that. Appreciate you sharing that. Thank you so much for carving out some time. I know you're very busy. You've been in high demand these days with all this going on, I appreciate it. Uh, Karan for joining me and for being on the show and being a friend. And I'm excited to share this next week, you know, as this goes out and hopefully we'll have a better idea of where things are going. But buckle up and let's see what happens here. But make sure you're taking the time to prepare yourself. Any last words before we let you go?
[00:41:01] Guest: Karan Sood: Stay calm. Fear is not going to be easy for anyone, for finance folks or pricing folks or anyone else who's in the weeds figuring out what the impact of this is going to be. Stay calm. Don't make your sales too soon. Information is constantly changing and strategies are constantly changing. Hold your ground and try to be a cross collaborator. Be that. Be that person, like in finance or in pricing. That sort of brings everyone together towards the common goal. And I think this is a moment to shine for a lot of people.
[00:41:33] Host: Paul Barnhurst: Perfect. I really like that. Stay calm. It's an opportunity to shine and we'll all get through this. You know, this is just like everything else we get through. It. Just work your way through it. Yeah. Well, thank you so much for joining me. And you have a great rest of your day.
[00:41:47] Guest: Karan Sood: Thanks for having me. It's always a pleasure, Paul.
[00:41:51] Host: Paul Barnhurst: Thanks for listening to the Future Finance Show. And thanks to our sponsor, QFlow.ai. If you enjoyed this episode, please leave a rating and review on your podcast platform of choice and may your robot overlords be with you.