Pricing objectives: How to choose your North Star Goal
What do you need pricing to achieve?
The obvious answer might be “growth”; however, growth can mean very different things. Your objective with pricing may be to increase revenue, improve profit margins, attract more customers or retain and increase spend with more of the customers you already have.
Pricing can support all of these commercial outcomes—but it can’t optimise for every one of them at the same time.
That’s because every pricing decision involves a trade-off. A lower price could help you win more customers, but reduce the profit you make from each sale. A higher price could strengthen your margins and premium positioning, but cause fewer people to buy.
Without a clear priority, businesses can end up pulling their pricing strategy (and their team) in opposite directions. That is why we encourage leaders to define a North Star Goal: the single most important outcome that pricing needs to support.
In this article, we’ll explore:
- The tensions that make pricing objectives difficult to prioritise
- How to choose the right North Star Goal for your business
- How to use your North Star to make better pricing decisions
What is a North Star Goal in pricing?
A North Star Goal is the single commercial outcome your pricing strategy will prioritise above all others.
It connects your pricing strategy to your wider business strategy by answering a fundamental question: what does the business most need pricing to achieve?
For example, your North Star Goal might be to:
- Grow revenue
- Improve profit margins
- Win more customers or increase market share
- Strengthen retention and customer lifetime value
Setting a North Star does not mean ignoring every other measure of success; after all, a business focused on increasing market share still needs to protect its margins. It is about deciding which outcome takes priority and understanding the trade-offs that may be required to achieve it.
As the examples below show, your chosen objective shapes both the pricing strategy you pursue and the commercial trade-offs you may need to accept.
Example from The Pricing Sprint (page 15)
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Why your pricing objectives require trade-offs
When a business has not agreed on its North Star Goal, the tension shows up in everyday decisions. The sales team discounts to protect conversion, while finance focuses on recovering margin. Marketing may favour an accessible entry price while the leadership team wants a more premium position. The debate is endless because each person judges results against a different measure of success.
The team at Untapped saw this tension within one European gift retailer. Faced with growing competitive pressure, some members of its leadership team and board wanted pricing to defend the company’s strong market share. Others believed its reputation for quality and service gave it scope to increase prices to boost profitability after years of taking a cautious approach.
Both perspectives had merit, but they pointed towards very different pricing strategies.
- Increasing market share would mean setting more competitive prices and promotions
- Increasing profitability would mean higher prices with fewer discounts
The business could not move forward with developing a pricing strategy until its leaders agreed which outcome pricing should prioritise.
How to define your North Star Goal
Start by bringing together the people who influence or are affected by pricing. That will often include leaders from sales, finance, marketing, product and customer success. Each function sees a different part of the picture, and surfacing those perspectives early can reveal important tensions.
Then work through these three questions:
1. What is the business’s most important commercial priority?
Start with what the business needs to achieve over the next 12-24 months. Is the priority to increase revenue, improve profitability, gain market share or strengthen customer lifetime value? If everything is equally important, nothing can guide the difficult decisions. Choose the outcome that matters most at this stage of the business.
2. What trade-offs are we prepared to make in order to get there?
Every priority comes at a cost. If profitability is the North Star, how much volume loss could the business accept? If market share matters most, how much short-term margin is it prepared to invest? If nobody can agree what the business is willing to sacrifice, the North Star is not yet clear enough.
3. What evidence will tell us we are making progress?
Agree how you will recognise success. If profitability is the goal, will you track gross margin, contribution profit or profit per customer? If market share is the goal, will you measure customer volume, sales volume or share of the market? Choose the measures that best reflect the North Star.
The ultimate test of your North Star Goal is whether it helps your team make difficult decisions. Test it against the pricing scenarios the business is likely to face over the next 12 months. For example:
- If a large customer demanded a discount, would we protect the relationship or protect your margin?
- If removing a popular promotion reduced sales volume but increased contribution profit, would we proceed?
- If a price increase improved short-term revenue but put customer retention at risk, which outcome would take priority?
Use your North Star to make better pricing decisions
Defining the goal is only the beginning. You’ll use your North Star Goal three ways:
1. Build a pricing strategy aligned with your business goals
Your North Star goal will shape the decisions that become a critical part of your pricing strategy, such as where you set prices and how you manage discounting and promotion.
As you design your pricing strategy, use evidence from customer insights, willingness to pay, competitor activity, costs and commercial performance to decide which pricing tactics are most likely to deliver on your commercial goals.
Untapped’s guide to pricing strategy explores these choices in more detail.
2. Evaluate pricing changes before acting
Even a well-designed pricing strategy will come under pressure. A competitor may lower its prices, or a large customer may request a discount.
Use your North Star to assess the potential changes before reacting, considering:
- Will this change move us closer to our North Star Goal or only solve an immediate problem?
- What evidence do we have about the likely effect on customer behaviour and commercial performance?
Where the impact is uncertain, customer research or price testing can help you evaluate the opportunities, risks and trade-offs before committing to a full launch.
3. Review your pricing objectives as the business evolves
Revisit your North Star when the business enters a new stage of growth, market conditions change, or the existing pricing strategy stops delivering what you need.
Your North Star is the starting point for confident pricing decisions. Is your leadership team aligned on what pricing needs to achieve?
Talk to Untapped to see how we can help define your North Star Goal and align your team around the pricing strategy to deliver it.
Get started on your Pricing Sprint®
1. Talk to a pricing expert
We’ll explore your pricing goals, understand your current approach, and pinpoint the biggest commercial opportunities.
2. Join a Springboard session
Bring your team together for a complimentary 90-minute session. You’ll experience how we work while we learn more about your business and start to uncover practical ways pricing can accelerate growth.
3. Get a proposal
We’ll translate what we’ve learned into a clear, tailored proposal with options, outcomes, and next steps so you can move forward confidently.
Get started
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Or, email us at hello@untappedpricing.co.uk
