Third Lever
Most debates about profit focus on two levers: cut costs or grow volume.
A third—pricing—sits in plain sight but is usually left alone.
In many firms it’s bolted on at the end of product management, traded away by sales, or considered too sensitive to touch at board level.
Price is not an outcome. Price is a choice.
Price as strategy
“The market sets the price” is usually a comforting myth.
Outside pure commodities, most companies have more room than they admit.
Price signals who you serve, how you position, and the value you claim to deliver.
It sits at the junction of three activities:
Creating value in product and service.
Communicating value in marketing and sales.
Capturing value in commercial terms.
The impact of a price change is the extra revenue minus the sales you lose. Demand often falls less than people fear—if the product is genuinely good.
The warning: repeated increases without visible improvements erode trust quickly. Customers will pay more when they see more. They resent paying more for the same.
The real issue is not “raise or lower?” but how pricing is run.
In most firms it’s fragmented: product bolts it on, sales trades it away, finance buries it in forecasts.
Testing is possible, but not simple.
Systems must invoice and report cleanly. Contracts need to line up.
Done badly, the noise outweighs the learning. Which is why pricing should be designed and owned as a process, not left to habit.
That means clear assumptions, controlled adjustments, measured outcomes, and senior accountability.
Treating pricing as a core discipline forces clarity:
What do we believe customers will pay, and why?
How do we measure the trade-offs—revenue, churn, win rates, renewals?
Are increases tied to improvements customers can actually see?
Handled well, pricing protects margin and sharpens strategy. Handled casually, it undermines both.
Pricing feels technical, political, and awkward. That’s why it so often gets neglected.
But it’s also one of the clearest levers a business has.
Get it right, and you don’t just earn more—you make explicit what you stand for, who you serve, and how you compete.
Related: Real Choices · Reading Guide