Price is the ONLY cost-free lever you can pull to increase revenues AND profits.

Think about that for a moment: pricing is the only action you can take that boosts revenues and profits without costing you a penny.

Every extra £1, $1, or €1 earned through price improvement drops directly to your bottom line.

If that’s true, why do so many businesses only consider pricing as a last resort?

Recently, I've spoken with several businesses who confessed to taking a passive approach—or even doing nothing—when it comes to pricing.

As a business leader, you’re well aware that costs are rising and demand is becoming harder to capture. Yet, you’d rather stick a pin in your eye than do something with your pricing.

In this article, I will share the problems that arise from a passive approach to pricing and show you some steps you can take (and a free template) to help you manage it more proactively.

The Pricing Trap

Most businesses fall into a "pricing trap," feeling boxed in and ultimately taking no action.

This makes sense, as few people receive any training in effective pricing. Instead, they simply mimic competitors, follow market trends, and try not to rock the boat.

This passive approach results in:

• Fear of making mistakes
• Overemphasis on cost reduction rather than revenue growth
• Misdiagnosing growth problems (e.g., investing in sales or marketing when pricing is the real issue)
• Simplistic price decisions (“How much can we raise prices this year?”)
• Excessive use of discounts to close deals
• Fear of upsetting key customers or losing future sales
• Lack of a clear pricing strategy and framework.

The Impact of Ignoring Pricing

The impact of taking a passive pricing approach can damage your business more severely than you realise, including:

• Declining profit margins
• Fear of losing business
• Misalignment between your product quality and your price positioning
• Lack of internal alignment on pricing strategy, causing inconsistent messaging
• Low confidence in your pricing decisions.

A Bain & Co study involving 1,700 companies found that 85% of CEOs admitted their pricing could significantly improve. Once you fully understand the hard link between price improvement and profit growth, you'll realise the pressing need to manage it more proactively. 

A Simple Example

Consider a straightforward example:

A business generates £20m in revenue with a 10% EBITDA (£2m). A 1% improvement in net prices across all products and customers increases revenues to £20.2m (assuming all other things being equal).

This boosts net profits from £2.0m to £2.2m—a 10% increase in profits from just a 1% pricing improvement.

What do your figures look like in this scenario? Many businesses don't perform this simple calculation, often believing it's unattainable.

Of course, your exact outcomes will depend on your business model, P&L, market, and capabilities, but the fundamental truth remains consistent: sustainable pricing improvements significantly drive profit growth. 

How to Start Improving Your Pricing.

1.      Focus on New Business Pricing First

Given your deep understanding of your business, market, and customers, how would you price your offerings if you were starting today?

Businesses often hesitate on price changes because they worry, “Client X won’t like it,” and end up stuck in indecision.

Start fresh with a blank sheet of paper, and design the ideal pricing strategy to attract new customers at profitable rates. Once satisfied, reverse-engineer this model to adapt to existing customers, continually refining until you reach an optimal solution.

2.      Write a Pricing Policy

Most businesses lack a written pricing policy, yet documenting one brings huge clarity.

Your pricing policy doesn’t need to be lengthy—2 to 3 pages are sufficient, particularly for smaller businesses.

Once drafted, share this policy with key stakeholders—your CFO, CRO, CMO, CPO, and sales teams—to ensure alignment and commitment.

Use your written pricing policy internally and include it in training materials. Owning and constantly referring to it makes it an extremely powerful business tool.

Free Pricing Policy Template

As a bonus, I offer a free pricing policy template. If you’d like a copy, just let me know.

Results from Strategic Pricing Reviews

While respecting client confidentiality, I can say that strategic pricing reviews have helped our top clients boost net profits by an average of 22%.

Though outcomes vary by sector and business size, most businesses we’ve worked with have found sustainable paths to higher revenue and profits by rethinking their pricing strategies and implementing clear action plans.

Don’t let the fear of upsetting customers prevent you from taking action.

Conclusion

Pricing remains your only cost-free lever for improving revenues and profits. It demands careful, sustainable management—but a proactive approach can make a big difference to any business.

If you'd like help refining your pricing policy, feel free to get in touch.