Is It Time to Review Your Pricing Strategy?
- July 29, 2025
- Posted by: Sidharth Macherla
- Category: Blog
Summary:
Wondering if your businessʼs pricing needs a refresh? This article explains when and how to
review your pricing strategy, why it matters for long-term profits, common challenges, and a
simple 3-step audit to ensure your pricing aligns with profit goals.
When should you review pricing?
Your business should review pricing whenever your current approach to pricing no longer supports your long term business objective i.e. incremental profits. Pricing often starts out simple. However, as the customer base grows, pricing structures evolve and they can become complicated. Sometimes, they may even work against your business profit growth.
Key indicators that itʼs time to review your pricing:
1. It has been more than a year since you last reviewed pricing.
2. Your staff have the ability to override the system and offer a different discount.
3. More than 15% of the transactions are based on custom pricing agreements.
4. Over the last 2 years, the maximum price of any product is more than triple the minimum price of that product.
5. The product margins as known to the sales team are much higher than known to the accounting team.
Effective pricing strategies that most businesses adopt
Most businesses aim for incremental profits over the long-term by rewarding and retaining high-value customers. To do this, pricing strategies often pursue the following approaches.
1. Offer discounts for buying in larger volumes (e.g., Silver, Gold, Platinum tiers).
2. Entice low-value customers to become higher-value through better pricing and incentives.
3. Introduce custom proposals, one-off special deals, or regional pricing.
While these strategies are well intentioned and reasonable, they add layers of complexity over time. A regular review of the prices keeps the complexity in check and enables optimal prices.
A simple 3-step approach to audit pricing
Wondering if your current pricing strategy is still effective? Try the following.
1. Customer segmentation: Group customers by value (Low, Medium and High) for the last 12 months. Then, repeat for the 12 months before.
2. Measure value changes: Track changes in customer value over these two years. Are they moving up, down or staying at the same level?
3. Comparative analysis: Overlay current pricing and see if customers moving down the value chain are receiving higher discounts or incentives.
If lower-value customers receive greater rewards, your strategy may need correction.
FAQ: Why do businesses need pricing consultants?
Despite the simple approach explained earlier, businesses often struggle to review or overhaul their pricing for data reasons. Businesses need pricing consultants because they have a wide ranging experience across multiple industries and hence are best positioned to offer quick and effective ways of tackling data challenges.
Here are some challenges that we see more frequently than others.
1. Purchase frequency varies, with some customers not buying every year. This complicates tracking the customer segment changes.
2. Most businesses have some form of B2B proposals that are based on bidding and multiple quotes. This skews the data on account of outlier prices.
3. Non-profit reasons driving pricing decisions such as strategoc partnerships cloud profit-first thinking.
Don’t worry if you find these issues in your own business. They’re more common than you think. Every company’s situation is unique, shaped by its history, industry norms, and growth ambitions.
Contact us to book a discovery call and realign your pricing strategy for future success