Turning Tariff-Induced Scarcity into Profits

While skiing last winter in Park City Utah, I was reminded about how expensive it was to eat on the mountain. When all the basics for lunch on the mountain were tallied, a simple lunch for a family of 4 easily topped $150.

It is the principle of scarcity at work – literally! After all, how many dining options are there at the top of a mountain? When needed items, or options to buy those items, are scarce, the price can rise with minimal risk of losing sales.

In addition to the obvious limited time period offers or limited editions of popular items, scarcity is a great way for all companies to increase revenue and profits, often at full price. It even works for B2B companies.

I am reminded of how we created scarcity for one of my clients back in 2018 and dramatically increased revenues as a result. They are a manufacturer of studio grip and lighting equipment. Much of the equipment uses steel and aluminum.

When President Trump announced his program of tariffs on steel and aluminum in his first term, panic set into the executive team as they speculated what the tariffs might do to their cost of raw materials. We all quickly realized that a similar panic would also afflict their customers as they anticipated seeing their price of finished goods rise as a result.

An external event that people expected to happen – tariffs – was creating a seemingly very real perception of scarcity at that moment in the marketplace.

So, we created a pre-tariff sale.

For a limited amount of time, customers were able to order as much full-price grip and lighting equipment as they wanted, and we guaranteed availability for them at the pre-tariff price.

The result – the company’s largest sale in years. All at full price. All because we took advantage of an opportunity for scarcity in the market.

Scarcity works. And it can work for you.

What opportunities for scarcity do you have in your business?