General Dynamics Aerospace Pricing Spineometer: 2 of 5 Vertebrae

General Dynamics Aerospace, the business jet and aftermarket parts and service division of General Dynamics, had a positive FY 2024 2023. Aerospace revenue rose 30% to $11.2 billion and earnings before interest and taxes rose 23% to $1.5 billion over 2023.

A review of General Dynamics’ 29 January 2025 earnings call and associated financial reports provided insight regarding the importance of pricing on the performance of their Aerospace division.

Industry benchmarks would suggest 23 to 115 pricing professionals dedicated to supporting General Dynamics Aerospace.?

1. Launching new aircraft requires significant research and development effort followed by the lengthy Federal Aviation Administration (FAA) approval process.? When new product development (NPD) lifecycles stretch over years, best practice are for pricing professionals to estimate the price of the new aircraft prior to the investment decisions to develop that aircraft using Economic Value to Customer calculations, followed by clarifying the launch price via updating the Economic Value to Customer with new information and coupling this fact with primary market research on willingness-to-pay.? (Wiglaf Pricing does this for clients.)
2. For aircraft in the market, pricing analytics can identify the price guidelines for individual customers and situations to guide price negotiations. Through this analysis, salespeople can be informed of the range of good to bad pricing to capture for specific customers and finance would be informed, a priori, of the expected price outcome of a sale. (This is the purpose of our new AI pricing tool SIGNY by Wiglaf Pricing.)? This would address potential challenges with $7.8 billion in Aerospace revenue.
3. Aerospace reports significant revenue associated with custom completion and refurbishment. This is an area where price structure tradeoffs between Add-on, Good-Better-Best Versioning, and Price Bundling could support business decision making and price capture.? (Wiglaf Pricing delivers services on price structure optimization.)
4. Services and Parts, such as their FAST rapid response service for maintenance, are generally a higher margin line of business than new aircraft sales.? Here, monitoring customer lifetime value and management of aftermarket parts and service pricing have been found with many original equipment manufacturers (OEM) to deliver strong profit opportunities.? This would address potential challenges with $3.4 billion in Aerospace revenue.?
5. Aerospace operates with over 50 locations across North America, Europe, the Middle East, and Asia-Pacific.? Each of these geographies likely faces slightly different competitive dynamics.? Pricing professionals working with commercial teams can optimize geography and customer-specific commercial policy.
6. General economic conditions also impact business performance at Aerospace.? Pricing professionals or applied economists are able to disentangle pricing dynamics from economic factors separate from those of competitive dynamics to enable executives to operate with greater certainty.

Research into the investment by General Dynamics Aerospace in pricing yielded underwhelming results.

1. The number of professionals identifying pricing as their profession was at or below industry benchmarks.? A search for pricing roles at Gulfstream or General Dynamics identified zero opportunities.
2. Those people engaged in pricing at General Dynamics Aerospace were limited in authority and expertise to roles of analyst or manager.? This produces uncertainty regarding the ability of General Dynamics Aerospace to fully manage the complexity of pricing research, economic forecasting, and price structure optimization or customer lifetime value optimization.? ?
3. The actual responsibilities of pricing professionals at General Dynamics Aerospace were identified as related to contract management and auditing.? This increases the concern regarding the price management function at General Dynamics.?

Given the importance and capability of pricing at General Dynamics Aerospace as indicated in financial reports, management statements, and our pricing team research, and given their performance, we have come to the following conclusion as of March 2025.

General Dynamics Aerospace Pricing Spineometer: 2 out of 5 Vertebrae. No specific pricing misstep was identified but there are many opportunities for improvement as outlined above.? (Wiglaf Pricing exists to address any of items identified above at client companies.)

GD (General Dynamics Corporation) fell from 262 the day prior to their earnings call to 258 one week later. FY 2025 revenue for Aerospace of $11.2 billion with a 13% operating margin and P/E ratio near 21.?

For FY 2024, a 1% improvement in price would yield an 8% improvement in operating profits holding all else constant at General Dynamics Aerospace.

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** General Dynamics is organized into four operating units: Aerospace, Marine Systems, Combat Systems, and Technologies.? The latter three are focused on defense customers.? The first makes Gulfstream business jets among other offerings. While pricing defense contracts to governments is suspected to be managed by project managers with a cost-plus arrangement due to government fiat, the Aerospace unit would benefit from pricing professionals.? As such, this analysis focuses on the Aerospace division which generates 24% of General Dynamics revenue.