Pricing is a strategy decision, not a finance one

Who sets your prices?

In most founder-led companies, prices were set years ago by the founder and a spreadsheet. Since then they have moved by the same percentage every January. Nobody owns them, so nobody questions them, and the sales team discounts its way around them.

1. Price is a choice of customer

Every price tells some customers to stay and others to leave. A low price fills the order book with buyers who will leave for the next discount. A clear price with a reason behind it keeps the customers who value what you do.

2. Discounts are a symptom

When more than a third of deals close below list price, the list price is fiction. Look at who asks for discounts and why. The answer usually points at a product, a segment or a promise that no longer fits.

3. Test before you change

Change prices on a slice of the market first: one region, one segment or new customers only. Measure win rate and margin for eight weeks, then decide. The test costs little and settles arguments that a spreadsheet never will.

Where to begin

1. List your ten largest customers and what they really pay.

2. Write down why each of them buys from you.

3. Find the price that matches that reason, then test it on new customers.

Pricing work rarely needs new software. It needs an owner, a few weeks of honest numbers and the courage to lose a customer you should not have had.