Your pricing strategy just might be your best investment in sustainable growth
Writing: Ann Padley & Jenny Millar
Two companies raised their prices. One lost 18% of its customers; the other increased profit by 22%. The difference wasn’t the market or the product. It was how they approached the price increase.
With rising costs and shrinking margins, the leadership team of the first company implemented a blanket 10% price increase across the board. Frontline teams weren’t consulted. The product team’s next quarterly release was forgotten. When the price change hit customers’ inboxes, it caused confusion. Cancellations increased as internal teams struggled to explain the changes. Revenue dipped and morale followed.
The second company faced similar cost pressures but took a more strategic approach. They spoke with frontline teams to understand what they were hearing from customers and prospects. They worked with the product team to understand the next release. And they talked to customers to understand what they valued most.
Instead of a blanket increase, the second company repackaged parts of their offering, linked price changes to product improvements, and tested communications before rolling them out widely. When the changes were introduced, the rationale was clear – and the business saw profits rise.
For many businesses, price increases are not only about maximizing profit. Responding to rising costs driven by tariffs, fuel prices, wage pressures, inflation and shifts in demand is critical to maintaining a resilient business. While many leadership teams revisit pricing only when external pressures force their hand, it’s the companies that make pricing central to their commercial strategy that gain a distinct advantage. They have built the confidence and insight needed to make deliberate decisions about value, positioning and growth. According to research by McKinsey, with every 1% price improvement, operating profit increases by 11% – a greater financial impact than equal changes in volume or cost reductions.
Ask better questions about price
Organizations looking to build pricing into their commercial strategy must start by asking a few key questions.
- What do customers truly value in our offer?
- Which parts of our product or service matter most in their decision to buy, and how much are they willing to pay?
- Where are we delivering value that isn’t fully reflected in our price?
- What message is our price sending about our brand?
These questions sound simple, but the answers are rarely obvious. Many companies discover that the features they invest the most time and resources in are not, in fact, the elements that customers value most. Others find that their customers will happily pay more for convenience, reliability or support, even when the core product remains unchanged.
Build the evidence to inform decision-making
The answers to those strategic pricing questions typically come from four places: internal expertise and data, customer insight, market data, and experimentation.
Start with the knowledge inside your organization
Sales, customer success, product and finance teams each see pricing from a different angle. Sales hears objections, customer success sees retention risks, product understands upcoming changes, and finance tracks profitability. Combined with internal data – such as discount patterns, upgrade behavior and profitability by segment – these insights reveal where pricing is working and where it isn’t.
Listen to customers
Customer interviews are powerful tools for understanding value. The underlying goal is to understand how customers make decisions. What problem are they solving? What alternatives do they consider? What makes one option feel worth paying for over another? Only then can we begin to understand willingness to pay.
When asking about price, don’t just ask, “What would you pay?” Instead, use well-established pricing research techniques, such as the Van Westendorp method, to identify a realistic price range. For example: “At what price would this represent great value for money?” and “At what price would this be getting expensive, but you might still consider it?”
Validate patterns with quantitative research
Once early insights emerge, surveys can help size the opportunity by identifying who they apply to, and how many customers in the market share those views.
Quantitative surveys help organizations measure willingness to pay at scale, identify meaningful price thresholds, and anticipate how different customer segments may respond. This step reduces the risk of relying on a handful of anecdotes or internal assumptions.
Test before committing
Rather than implementing a single large change, organizations can run controlled tests: trialing new packages, adjusting price presentation, or introducing changes to a limited group of customers first. These experiments provide real behavioral data and allow teams to refine their approach before rolling them out more widely.
Build pricing into a strategic capability
Pricing decisions involve multiple teams, competing priorities, and uncertainty that can slow progress. While pricing functions often excel at analysis and financial modeling, many lack a structured process for making pricing decisions that are collaborative and evidence-led. We developed our approach, the Pricing Sprint, to address this challenge.
The price a company sets does more than determine revenue. It signals value, shapes customer expectations, and influences how a brand is positioned in the market. Taking a structured approach shifts pricing from a reactive task to a far more strategic capability. Rather than pushing through price changes in isolation, teams build a shared understanding of value and the confidence to act on it.
For leaders navigating uncertain markets, building the capability to make pricing decisions that reflect both customer and business value may be one of the most important investments you can make for sustainable growth.
Ann Padley and Jenny Millar are senior partner and CEO at Untapped Pricing, and co-authors of The Pricing Sprint: 12 Steps to Unlock the Power of Pricing (Bloomsbury)
