Pricing as a strategic growth lever

By Christoph Krauss

Uncertainty has always been part and parcel of the toy business: a single breakout hit can salvage an entire year, while a weak Christmas can ruin it. But the challenges facing manufacturers, brand owners and retailers today go far beyond the familiar fluctuations of trends and seasonality.

The costs of materials, energy, logistics and regulatory compliance have risen and remain volatile. Trade policy and tariffs turn every sourcing decision into a strategic bet. Platforms offering rock-bottom prices with direct shipping from Asia are reshaping what consumers consider a fair price for toys.

Retail continues to consolidate, while online marketplaces make every price instantly comparable across borders. At the same time, the core target group is shrinking: birth rates in Europe are falling and children are turning to digital media earlier than ever.

A market under pressure – but full of opportunity

Yet the market is far from stagnant. Adult collectors and kidults are spending more than ever. Collectibles, limited editions and powerful licensing franchises create genuine willingness to pay, and well-managed brands can still rely on loyal customers at the shelf. The gap between winners and losers is widening — and pricing often makes the decisive difference. Successful toy companies use price as a strategic lever rather than merely reacting to external developments.

Questions the industry is asking

Commercial and sales leaders across the toy sector are grappling with urgent pricing questions:

• How can rising costs and tariffs be passed on without losing volume and listings?
• What does a price architecture look like that can withstand discounters and platforms shipping directly from China?
• Which price points really matter to buyers, and how should the range be tiered accordingly?
• How should prices be set for collectors and adult fans, whose willingness to pay follows different rules than parents buying a birthday present?
• How can online and offline prices remain consistent, and how can price erosion on marketplaces and across borders be prevented?

Often, the biggest untapped profit potential lies where few expect it: in three areas that can be unlocked without jeopardising brand equity or trading relationships.

Margin lever 1: trading terms

Trading terms are among the most underestimated drivers of results in the industry. In many toy companies, they have evolved over time. Often, no one can say with precision what a retailer actually pays — and what the company receives in return. The result is a widening gap between list price and actual net price, often worth several margin points. Performance-based terms frameworks can help: they deliberately reward partners who contribute to brand equity and strengthen the manufacturer’s hand in annual negotiations.

Margin lever 2: seasonal promotions

Many promotions primarily generate sales that would have happened anyway. Post-Christmas clearance is particularly critical: it can quietly undo a year’s worth of price discipline. Companies should therefore measure the true incremental uplift of their promotions consistently. This allows price reductions to be planned with a clear eye on profitability rather than repeated out of habit.

Margin lever 3: organisation

Improved pricing only endures when it is firmly embedded in the organisation. That requires clear accountabilities and decision rights, as well as the right data. Above all, it calls for an organisation that treats price as a lever to be actively managed — not as the outcome of short-term bargaining.

Conclusion: price is more than a number on the box

Whether manufacturer, brand owner or retailer: those who address terms, promotions and organisation in a targeted way can sharpen their sales and pricing strategy for the coming seasons and seize the opportunities of a market under pressure. Many measures can be implemented quickly. In today’s toy industry, price is one of the most powerful levers of business success — provided it is actively managed.

About the author

Christoph Krauss is an Associate Partner at Prof. Roll & Pastuch. He has more than 25 years’ experience in marketing and sales at leading consumer goods companies, as well as in advising clients on sales, strategy and pricing. His expertise informs numerous publications, TV appearances and talks. Christoph Krauss focuses in particular on B2C clients and heads the consumer goods practice at Prof. Roll & Pastuch.