Why your pricing model is the biggest lever to profitable, scalable growth.

Most discussions about the challenges for achieving scalable growth focus on big, complex issues like:

• Finding and retaining the right talent
• Accessing funding and maintaining steady cash flow
• Achieving product-market fit
• Acquiring and retaining customers
• Embracing new technologies
• Leadership and team alignment

These are undeniably critical challenges, but they take time, resources, and effort to solve.?

What’s often overlooked is pricing. Many assume pricing is “relatively easy” compared to the above. But have you ever considered how many of your growth challenges could be tied directly to your pricing strategy?

Signs Your Pricing Might Be Holding You Back

Here are common symptoms of a weak pricing strategy:

• Uncontrolled discounting
• Poor planning around annual price increases
• Sales teams offering the “cheapest price” to win deals
• Lack of visibility of client or product profitability
• Pricing decisions made solely on revenue projections, ignoring profit impact
• Believing you can “make it up in volume” with lower prices (without knowing the true uplift you actually need)
• Selling on features and benefits instead of ROI or value delivered
• No clear understanding of the value you bring to your clients

All of these problems can undermine your ability to achieve scalable, profitable growth. And they often disappear completely when you get your pricing strategy right.

?When Everything Is Not Quite Joined Up…

It’s heart-breaking to see businesses with great products, top-notch marketing, talented teams, smart tech, and ample funding struggle to grow because their pricing strategy is off. Without the right pricing model, even the best-run businesses eventually hit a wall.

This misalignment often leads to:

• Low profitability and slim margins
• Cash flow challenges
• Weak confidence in your value proposition
• Uncertainty about the future sales pipeline
• Internal misalignment about business goals
• Fear of losing customers if you increase prices

Start-up failure rates underscore the urgency here. Up to 90% of tech start-ups fail, often citing lack of cash as the reason.*

But why do they run out of cash? In many cases, it’s because their pricing model wasn’t designed to capture enough value or sustain growth.

?Common Pricing Issues and their Root Causes

Here’s how to tell if your pricing strategy might not be doing you any favours:

At the heart of all these issues is often a single problem: no clear pricing strategy.

The reality is that most business leaders (including many successful ones) don’t really know what a pricing strategy is, and don’t know how to describe theirs. (Hint: if you’re not sure, write yours down on 1 sheet of paper to try and get clarity about what you are doing today.)

?Rethinking Your Pricing Model

Most businesses start their pricing discussions with costs or competitive positioning. While these are important, they’re not the right starting point.

What’s more important is to think about your customers, and what you want to achieve as a business.

1. Company Goals: Are you prioritizing revenue growth, market share, or profit margins? Each goal requires a different pricing approach.
2. Customer Value: Do you understand how your customers perceive value, and have you gauged their willingness to pay?
3. Product Offering: Is your product structured to maximize value across different customer segments?
4. Competitive Positioning: Are you clear about where you stand in the market and how you compare to alternatives?
5. Costs & Margins: Do you know your unit costs and how different pricing scenarios impact your profit margins?

By addressing these elements, you can design a pricing model that supports both growth and profitability.

?Client Example

One SaaS client had strong ARR after six years of growth, but it hit a plateau. The problem? Their pricing model didn’t account for the variety of user types they served, and their prices were out of sync with the market. By redesigning their model to better reflect their customer segments, they attracted more customers, improved access to their market, and increased their average selling prices

?Conclusion

Pricing isn’t just a “nice-to-have.” It’s one of the biggest levers you can pull to unlock sustainable profit growth. Too often, business leaders assume their pricing is “fine” without digging deeper. But when you invest the time to get it right, the results can be transformative.

If this resonates with you and you’d like to explore how to optimize your pricing strategy, feel free to reach out. I’d be happy to help.

*https://startupgenome.com/article/the-state-of-the-global-startup-economy