Many small businesses are doing everything they can to keep prices low for the 2025 holiday season, but for some, this may be the last year they can do so.

Marty Allen, founder of Sock Puppet City, relies on the holiday season to drive much of his revenue. His business, which began in 2006 selling puppet portraits in New York City parks, now sells puppets and produces videos for puppeteers. Like many niche businesses, Allen depends on the final months of the year for a significant portion of his annual income.

Strategies to Maintain Low Prices
Small businesses are taking multiple steps to avoid passing costs onto customers:

• Ordering inventory early
• Absorbing higher costs themselves
• Redesigning products to make them more affordable

Despite these efforts, rising tariffs, inflation, and economic pressures are testing their limits.

Holiday Sales Are Critical
For many small businesses, the fourth quarter is crucial:

• Sky Candle Co. co-founder Greg Dekermenjian says the last three months account for roughly 40% of annual revenue.
• Blank Canvas Co. CEO Erica Goldstein reports that holiday sales can contribute 33% to 66% of annual income.

These months can make or break small businesses, which often struggle during the first ten months of the year.

Economic Pressures

• Tariffs and inflation have significantly affected costs. About 46% of small businesses report being hurt by recent U.S. tariff policies.
• Rising labor and printing costs have forced companies like Blank Canvas Co. to absorb more expenses.

Consumer spending has also slowed, with the University of Michigan’s consumer-sentiment index dropping to 50.3 in November, near record lows.

Limited Options to Keep Prices Low
Many small business owners say they are running out of ways to keep prices low:

• Forecasting inventory months in advance
• Optimizing storage and consolidating warehouses
• Improving operational efficiency

Allen noted that his business absorbs costs from one key component shipped from China, warning that “it may be a different story next year.”

Future Price Increases Likely

• Around 43% of small businesses plan to increase prices due to inflation and economic pressures.
• Some companies, like Blank Canvas Co., are introducing smaller, more affordable products to maintain sales while lowering supply costs.

Goldstein said that while her company will absorb higher costs through December, higher prices may be unavoidable starting January 2026.

Summary
Small businesses are fighting to keep prices low this holiday season amid tariffs, inflation, and low consumer confidence. While many will manage to maintain affordability through December, economic realities suggest that next year may bring unavoidable price increases.