Business Advisory

Pricing is a strategy decision that finance is asked to justify afterwards

Of all the levers available to a business, price moves profit fastest. It is also the one most often delegated to instinct and defended after the fact.

Anandhakrishnan BFounder30 January 20265 min read

Pricing is a strategy decision that finance is asked to justify afterwards

A one per cent improvement in realised price usually moves profit more than a one per cent reduction in cost, and it takes less time. Yet cost reduction gets the programme and price gets a conversation.

Start with realised price, not list price

Very few businesses know what they actually receive. Between list price and bank credit sit discounts, schemes, credit notes, freight absorbed, and the cost of the extra sixty days. Calculate realised price per customer for a year and the range is usually wider than anyone expected.

Then ask who is being subsidised

Which customers sit below the average, and why, volume, history, or a conversation nobody has had?
Which products are priced from a cost sheet that has not been rebuilt since input costs moved?
Where has a discount become permanent because it was never given an end date?

The answers rarely require a price increase across the board. They require three or four specific corrections, made deliberately, with the commercial consequence understood before the conversation happens.