Four everyday reasons to call in pricing consultants
As pricing consultants, we’ve worked with hundreds of businesses facing a range of strategic challenges, from start-ups trying to break into a competitive market to companies trapped in a cycle of over-discounting. We’ve helped them all better understand their audience to unlock untapped revenue and take a more focused approach to their pricing in return for a boost in profits. However, we know many business leaders aren’t always sure about when, or even if, taking their pricing conversations out-of-house and speaking to a pricing consultant is a good idea. After all, pricing isn’t as critical as marketing and product development for example, right? That’s where so many companies get it so wrong.
Pricing is absolutely as important as marketing and product development. But here’s the thing: pricing doesn’t just support your marketing and product strategy; it amplifies their impact. It’s what connects the value you create and the value your customers are willing to pay for.
From our experience, the extra investment of working with a pricing consultant can be transformative. Why? Because pricing has a disproportionate impact on profitability. As McKinsey highlights, a 1% improvement in pricing results in an average increase of 11.1% in operating profit. No other lever comes close.
Despite this, pricing rarely gets the seat at the table it deserves. Businesses will allocate significant resources to marketing campaigns or product development, but they often treat pricing as a reactive afterthought. That’s a missed opportunity. Pricing, when done right, can drive growth, unlock profitability, and make the difference between good and exceptional performance.
At Untapped Pricing, we believe pricing deserves equal priority alongside product and marketing decisions—and our results consistently prove that giving pricing the attention it merits is one of the smartest moves a business can make.
In this article, we’ll explore what a pricing consultant is and how they can help, before taking you through the most common reasons that lead companies to turn to a pricing consultant. In doing so, we’ll look at some of the businesses we’ve helped over the years to demonstrate when it’s the right time to bring in pricing experts, and why you won’t regret it.
What exactly is a pricing consultant?
As experts in pricing strategy, pricing consultants work with businesses of all types and sizes to help define a systemised approach to setting their prices in order to maximise profits. They do this by analysing the market, performing quantitative and qualitative research to better understand customer behaviour, evaluating competitor pricing, and using data-driven insights. The solution and set of tools used will be different for every company and will also be impacted by the brand ambition and strategic goals of the business, all of which can help uncover the untapped revenue, increase market share and boost profits. You can read more about the impact pricing consultants can have and how to choose the right one in two of our recent articles.
What does a pricing strategy from a pricing consultant look like?
The approach to pricing will be different for every company, but what a pricing consultant will do is ensure that you have an effective pricing strategy in place that is bespoke to you. They will all have different tools, but at Untapped Pricing, we use a unique set of questions as part of our Pricing Strategy Blueprint to help us get started. You can discover more about that in our recent article, but the key outtake is that this gives us a great picture of the current state of your pricing process, who is accountable, what triggers a change in pricing and who you are pricing for.
We can then tap into our knowledge of specialist areas like pricing design, pricing psychology and price testing to help create the right most effective strategy and unlock that untapped revenue.
So, what are those common reasons that drive businesses to talk to a pricing consultant?
As pricing experts, we love to shout about the many pros of having an effective pricing strategy in place for your business. From helping to build and maintain your brand to unlocking untapped revenue, by taking a strategic approach to your pricing, you can quickly boost profits. Yet, we understand that making big changes to how you approach pricing could be contentious, and employing outside support can stretch your budget. So, when is a pricing consultant worth the investment? Here are a few real-life examples of when companies have turned to us, and how we applied our pricing consulting expertise to help.
1. A lack of confidence to adjust prices
As pricing consultants, a lack of confidence when it comes to pricing is a story we hear a lot. Companies often worry about how raising prices might impact business performance or customer sentiment. Will your audiences be put off by a price increase? If you push your prices above the competition, will you potentially lose market share? However, this hesitation can be costly. What many business owners don’t consider is that every year that you don’t increase your prices, your business is losing out on profit. Due to inflation, every £ or $ is automatically worth less, year after year. So, it’s important to act, and raise those prices. But to act you need to be confident that whatever you ask for is something your customers are willing to pay. This is a question we had to answer recently for an enterprise software client.
Example
Offering enterprise software for regulated industries such as pharmaceuticals and food & beverage, our client turned to us as pricing consultants to boost their revenue and margin growth through their pricing. They knew prices needed to increase but weren’t sure how best to go about it. We quickly helped them see that their big opportunity was to fully understand the value their product was providing to customers, and what they were willing to pay. You can’t understand one without the other, which is why we always talk directly to customers.
Through over 15 hours of internal and external interviews with sales leads, industry experts, customers and prospects we were able to gain the insights needed to better understand their ‘premium’ customer, learn what they were really willing to pay and unlock the sweet spot in their pricing. According to their CEO, “You went out and reached out to our customers. It gave us a lot of insight into how our customers are thinking. We had been scared of increasing pricing but as you started to really talk to senior members in our customers, we got some great insight into what value we return for the customers.”
Learning
The fear of change should never stop you from doing what’s best for your company. Investigate your options and do your research to understand what your customers really want. That way, when it comes to making those big decisions, like raising your prices, you’ll have knowledge and insight to back you up and give you the confidence to go for it. Or, even better, let a pricing consultant do all the hard work for you!
2. A feeling that money is being left on the table
There can be lots of different reasons why people turn to a pricing consultant when they believe there’s more money to be made. A hunch, by its very nature, it’s an unknown quantity, and often based on a feeling that you’re simply missing a trick. So, trust your gut. If you feel like there’s more money to be made, it’s probably because there is. One online healthcare client who came to us described how they knew they were losing out through their pricing, but they didn’t know by how much. Nor did they know what steps to take to fix the problem.
As we’ve already discovered, not regularly raising your prices can be costly. When we started working with this particular client, we discovered that they hadn’t changed their prices for five years. Five years is a very long time in pricing.
Example
By working with a pricing consultant, the first thing we were able to demonstrate was how much their profitability had been cut by their stagnated prices. Thanks to the passing years and high inflation, they had been losing more and more money on every unit, year after year. By the time they brought us in as their pricing consultants, we discovered that they were charging 38% below the competitive average for comparable products. This low level of pricing was devaluing the perceived quality of their products in the eyes of consumers, negatively impacting their profits, and had been for several years.
The second big lesson for our client was that instead of attracting a loyal fan base driven by the quality of their product, as they had believed, they were in fact the target of savvy shoppers who saw them as the best they could get at a lower price point. Price-savvy shoppers are notoriously fickle, so there was very little loyalty. And, this also meant that the premium brand they viewed as their direct competitor wasn’t even on the radar of their current set of customers.
By better understanding their unique set of circumstances, as pricing consultants, we were able to work with the brand to pinpoint where money was being lost, learn how they were perceived in the market and plan their pricing accordingly to set them up for future sustainable growth. With an initial modest move from 38% below market price to 27% below, and with some simple changes to the pricing logic, we unlocked $2.5 million per year in additional profits.
Learning
Doing nothing is never the best policy, especially if you’ve got a feeling that you’re missing out. Inflation alone will dent your margin, but what other damage might you be doing by not raising your prices? You don’t have to opt for the all-singing-all-dancing pricing consultant package to uncover the areas where your pricing strategy could be improved. Some offer more streamlined support, much like our award-winning Pricing Sprints, to help you discover where that untapped revenue could be and set you on the right path to unlocking it.
3. Under pressure to become more profitable
Whether you’re under pressure from investors, or there are internal pressures to increase profits, when the stakes are high, it might not seem like the time to invest in external support. However, as outsiders looking in, pricing consultants offer the benefit of unbiased insight and complete transparency into your business to help you unlock profitability in sometimes surprising places.
Example
One of our clients, a leading photo editing software company, was under pressure to be more profitable so they turned to a pricing consultant for help. Looking to unlock their next phase of growth their plan was to make blanket price increases. However, as it turned out, this wasn’t the answer.
We got to work prioritising growth segments, evaluating price sensitivity and identifying optimal price points. By engaging 7250 photo editors, we carried out surveys and interviews across the US, UK and Germany. This gave us the evidence and understanding we needed to give our client confidence to avoid making a short-term price rise, and instead target individual segments of the audience in order to gain that desired increase in profits.
A new programme of personalised promotions ensued, with targeting based on propensity to buy and price sensitivity. We gave them confidence in monetisation and the ongoing conviction to keep optimising their approach long after the project.
The results:
- 12.6% rise in revenue per subscriber
- Year over Year (YOY) increase in revenue per subscriber
- 21.2% rise in revenue per license
- YOY increase in revenue per license
- Shift to targeted promotions
Learning
It’s important to remember that, just because you’re under pressure to boost profits, simply raising prices isn’t always the quick fix that it might seem. Without the proper consideration, an ill-conceived price rise at the wrong time could ultimately do more harm than good to your business and your profits.
4. Prices are constantly discounted
Today, more than ever, businesses are under pressure to offer customers products at discounted prices. Global promotions like Black Friday are lasting longer than ever, and companies can feel uneasy about knowing where to draw the line.
Example
A European online gifting retailer, engaged us as their pricing consultants to help them escape their cycle of deep discounting. They wanted to maximise their profit potential and position on price but were operating in a market that was known for heavy discounting and frequent sales.
On closer inspection, we discovered that the team was lacking the confidence and toolkit to optimise pricing. This led to a reliance on over-discounting, out-of-date pricing and a lack of visibility on costs. As their pricing consultants, we were able to facilitate strategy sessions, conduct a robust quantitative survey, run deep data analytics and organise some discreet, measurable pricing trials.
In a bespoke market-level survey with 1,116 buyers, we tested willingness-to-pay and evidenced the client’s reputation for quality and dominant position in the market. This gave the team further confidence to raise prices and reduce discounting.
Working together, we helped the team to optimise how pricing and promotions drive their performance. From which they saw a 5:1 return on investment within 6 weeks. They had gained the confidence and data they needed to make informed changes in the future and increased their revenue and gross profits. Their Head of Performance Marketing said, “We can now be more courageous with our pricing & discount strategy, adjusting how we communicate pricing and value with confidence.”
Learning
Offering carefully planned discounts and promotions in itself is a great business tool. But over discounting can damage and devalue the perception of your brand. If you’re stuck in the discounting trap, ask yourself why you offer so many discounts. Is there market pressure, or in fact is it simply habit or lack of confidence in any alternative direction? The real trick is understanding whether discounting is right for you and if so, striking the right balance to peak interest without getting carried away. Here’s where a pricing consultant can be worth their weight in gold. A 5:1 return is not something to be sniffed at!
Is it time to talk pricing to a consultant?
There you have our 4 most valuable everyday reasons that regularly drive businesses to call in the pricing consultants. Whether you’re stuck in a discounting rut, or know that your pricing needs fixing but aren’t sure where to start, we’re confident a chat with a pricing consultant will be a step in the right direction. They will be able to offer invaluable independent insight and give you the confidence to make the changes that your company needs to thrive. Yet this is just the very start of the many ways your pricing challenges can be solved by an independent pricing consultant. From strategic challenges to new product development, check back soon for another article doing a deep dive into the fascinating and fruitful world of pricing.
