Why is Pricing the Most Underused Enterprise Growth Lever?
The boardroom falls silent as the CFO presents the quarterly results. Revenue growth has stagnated at 3%, operational costs continue climbing, and margin pressure intensifies across every business unit. The CEO turns to the room with the inevitable question: "What levers do we have left to pull?"
In most enterprise organizations, the conversation that follows revolves around familiar territory. Sales teams propose aggressive volume targets. Operations suggests cost reduction initiatives. Marketing advocates for increased brand investment. Yet the most powerful lever for profitability sits largely untouched, relegated to spreadsheet exercises and quarterly (or even worse) annual price list reviews. That lever is pricing strategy, and its underutilization represents one of the most significant missed opportunities in modern enterprise management.
As a former National Pricing Manager for an enterprise organization, I consider myself one of the lucky ones. I had the opportunity to shape pricing strategies for the entire North American market sector, creating frameworks that empowered smarter decision-making. From developing and deploying financial tools that evaluated new opportunities to crafting promotional plans, my work revolved around unlocking value through strategic pricing initiatives. Today, I’m fortunate to work with Pricefx, the most innovative and effective pricing software vendor in the pricing industry sector, where cutting-edge solutions continue to redefine success in pricing management.
In this piece, I aim to highlight why pricing should take a more prominent place in your organization's strategy and help you recognize signs of pricing issues within your business.
Let's dig in.
The Mathematics of Missed Opportunity
Consider this sobering reality: a 1% improvement in pricing typically delivers a 3-11% improvement in operating profits, depending on your industry and margin structure.
Compare this to the herculean efforts required to achieve equivalent results through other means. That same 1% profit improvement would require reducing variable costs by 3-8%, or increasing sales volume by 5-25%, depending on your current margins.
For a manufacturing company, for example, with $500 million in revenue and 8% operating margins for example, a modest 2% price optimization across product lines might generate an additional $10 million in operating profit. Achieving that same result through volume growth would require securing an additional $125 million in sales at those current margins. Yet despite these compelling economics, pricing remains the Cinderella of corporate strategy. Research consistently shows that fewer than 15% of companies have dedicated pricing functions, and even fewer treat pricing as a strategic capability worthy of systematic investment.
The Organizational Blind Spot
Why does this paradox persist? The answer lies in a complex web of organizational psychology, structural limitations, and deeply ingrained business habits that conspire to keep pricing in the shadows.
The Fear Factor That Can Dominate Decision Making
Sales organizations often live in perpetual fear of customer churn. This fear creates a powerful bias toward discount-heavy strategies and resistance to price increases, even when market conditions and value propositions clearly support higher prices. The psychological impact of losing a single high-visibility customer often overshadows the mathematical reality that modest price improvements across the broader customer base deliver superior financial outcomes.
This fear manifests most acutely in B2B environments where relationship dynamics complicate pricing decisions. Account managers become personally invested in maintaining harmony with key customers, often viewing price increases as personal relationship threats rather than business necessities.
Furthermore, sales teams are frequently rewarded based on revenue rather than margin, putting their incentives at odds with the company’s financial objectives and making them resistant to any efforts to raise prices.
Cross-Functional Coordination Challenges
Effective pricing requires seamless coordination across marketing, sales, finance, operations, and customer service.
Without strong governance and aligned incentives, these natural tensions fragment pricing decisions across the organization, resulting in inconsistent execution and suboptimal outcomes.
The Complexity Trap
Modern enterprise pricing involves thousands of SKUs, hundreds of customer segments, multiple channels, various contract types, and complex discount structures. This complexity overwhelms traditional spreadsheet-based approaches and makes it difficult for leadership to understand the true drivers of pricing performance.
Most organizations lack the analytical infrastructure to quickly decompose revenue changes into price versus volume effects. Without this foundational visibility, pricing becomes reactive rather than strategic, addressed only when problems become severe enough to impact overall financial performance.
The Strategic Imperative: From Tactical to Transformational
Leading enterprises recognize pricing optimization requires a fundamental shift from tactical price adjustments to strategic pricing capabilities. This transformation involves three critical dimensions:
1. Building Analytical Foundations
The journey begins with establishing robust pricing analytics that provide leadership with clear visibility into pricing performance drivers. There is nothing worse than conflicting analytics and siloed decision-making. It can paralyze an organization's ability to make effective decisions if different teams cannot even agree on where the problems are.
The price waterfall analysis serves as a foundational tool, tracking how gross revenue transforms into net revenue through various customer investments including volume discounts, prompt payment terms, rebates, cooperative marketing funds, and freight allowances.
Consider a chemical manufacturer serving industrial customers across multiple end markets. Without proper analytics, leadership might observe declining margins and assume competitive pressure requires lower prices. A comprehensive price waterfall analysis might reveal that while list prices remain stable, field sales teams are granting increasingly generous payment terms and volume discounts to secure quarterly targets.
2. Developing Organizational Capabilities
Sustainable pricing excellence requires dedicated organizational capabilities rather than ad hoc project teams. Leading companies establish pricing centers of excellence that combine analytical expertise, market intelligence, and change management skills. The most sophisticated organizations integrate pricing considerations into broader commercial processes:
- Sales compensation plans include metrics that balance volume growth with margin performance
- Customer segmentation strategies explicitly account for price sensitivity and willingness to pay
- Product development processes include pricing considerations from initial concept through market launch
3. Leveraging Technology for Scale and Precision
Modern pricing challenges require technological solutions that can process vast amounts of data, identify patterns, an d provide actionable recommendations at scale. Advanced pricing software platforms like Pricefx enable enterprises to move beyond spreadsheet-based approaches toward systematic, data-driven pricing management.
With supporting analytics and optimized pricing recommendations, everyone in an organization becomes an ally in effecting pricing improvements.
Real-World Applications: A Case Study for Manufacturing Pricing Excellence
Manufacturing industries provide compelling examples of pricing transformation potential. Consider a specialty chemicals manufacturer, one of the largest investor-owned oil and gas companies in the world. This company has expertise in exploration, production, refining, and marketing of oil, gas, and chemical products.
Prior to adopting Pricefx, the company relied on internally developed tools for managing price and margin processes. However, these solutions posed significant challenges for the pricing, sales, and commercial teams. One prominent issue was the lack of ability to pinpoint opportunities for improving margins at the deal level.
Furthermore, fragmented data across deal-making operations resulted in misaligned workflows within the business. The core pricing functions, including quoting, were missing intelligent sales guidance, which led to noticeable margin erosion.
Outdated manual workflows for data entry and analysis introduced inefficiencies into pricing and related processes. This disconnected approach negatively impacted the customer experience, causing delays and inconsistencies in quoting, deal setup, and contracting. Errors in the manual handling of formula pricing further contributed to margin deterioration.
From a strategic standpoint, the existing tools did not support the systematic deployment of value-based pricing guidance necessary to maintain competitiveness and achieve better business outcomes.
Elevating Pricing Guidance and Peer-Based Strategies
The organization leveraged cutting-edge pricing technology to refine its customer engagement and transaction strategies, implementing tools such as AI-driven optimization and advanced segmentation. The outcomes were striking:
- Enhanced Deal Outcomes: Within just four months, the sales team achieved a 33% improvement in deal outcomes, highlighting the impact of data-backed insights on commercial decision-making.
- Increased Margins: Optimized pricing execution and improved sales strategies contributed to a $15 million margin growth during the first year of adoption.
- Streamlined Operations: By enhancing pricing workflows and operations, the company not only boosted internal productivity but also delivered superior customer experience.
Speed, agility, and alignment; pricing software that is fully integrated across users' daily provides not only guidance but also decision support, and single version of truth on strategies and goals, meaning that large organizations can move as one to achieve their targets on every single transaction. These capabilities empowered the business to pinpoint opportunities and evaluate deals with precision, as described by one of the organization’s prominent leaders:
Click here to read the full case study
Implementation Complexity and Change Management
Pricing transformation requires significant organizational change, but this complexity can be managed through phased implementation approaches:
- Phase 1: Focus on analytical foundations and quick wins that demonstrate potential
- Phase 2: Expand capabilities with an alignment on analytics, AI and optimization tools and develop sophisticated pricing strategies
- Phase 3: Integrate pricing considerations into broader commercial processes and establish ongoing governance
This phased approach reduces implementation risk while building organizational confidence in pricing capabilities. Learn more about implementing pricing software and the time it takes here:
The Path Forward: Getting Started
Organizations ready to unlock the potential of strategic pricing should begin with diagnostic activities that establish baseline performance and identify improvement opportunities. This assessment should evaluate current pricing processes, analytical capabilities, organizational alignment, and technology infrastructure.
Quick wins to seek straight out of the gates might include:
- Discount governance improvements
- List price optimization for specific product lines
- Enhanced competitive intelligence processes
Longer-term initiatives might focus on building sustainable pricing capabilities including:
- Advanced analytics
- Cross-functional governance, and;
- Ongoing optimization and performance management
Success requires senior leadership commitment and cross-functional collaboration. Pricing transformation cannot be delegated to finance or sales organizations alone but requires coordinated effort across the entire commercial organization.
Unlocking The Competitive Advantage of Pricing Excellence
In an era of margin pressure and growth challenges, pricing represents the most underutilized lever for enterprise performance improvement. Organizations that develop sophisticated pricing capabilities gain sustainable competitive advantages that compound over time.
The transformation from tactical pricing adjustments to strategic pricing excellence requires investment and organizational commitment. However, the mathematical reality remains compelling: no other business lever delivers equivalent profit impact with comparable efficiency.
The question facing enterprise leaders is not whether pricing optimization offers attractive returns, but whether their organizations can afford to leave this powerful lever underutilized while competitors discover its potential. The enterprises that answer this challenge successfully will define competitive dynamics for the next decade.
The conversation about pricing deserves a prominent place in every boardroom, every strategic planning session, and every discussion about sustainable growth. The tools, technologies, and expertise exist to make pricing transformation achievable for any enterprise willing to make the commitment.
The only question remaining is whether your organization will lead this transformation or follow others who recognize that pricing excellence represents one of the last frontiers of competitive advantage in modern enterprise management.
To take a deeper dive into what it might be costing your company to NOT USE a pricing software solution, check into this insightful blog from my Pricefx colleague, Gabe Smith:
Meanwhile, Happy Pricing!
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Justin Childs
Principal Solution Strategist , Pricefx
Justin Childs is a Principal Solution Strategist with Pricefx, based in New Hampshire, USA. Prior to working with Pricefx; Justin spent 10 years working at a durable consumer goods manufacturer as their NA Pricing Manager. He has a demonstrated history of working in the consumer goods industry, packaging manufacturer and retailers, with particular focus on Pricing Strategy, Demand Planning, Financial Forecasting, and competitive intelligence. On the weekends, you will find Justin in his workshop learning new hobbies or playing with his son.