Article
Why 9 out of 10 companies are underperforming on pricing
Ask any director whether pricing matters, and the answer is always yes. Ask whether their organization is truly getting the most out of it, and the conversation suddenly gets a lot more uncomfortable.
Our State of Pricing 2025 research confirms what many already sense: 7 out of 10 board members are not satisfied with what pricing contributes to their business goals. And behind that frustration lies a bigger pattern. The majority of organisations are underperforming on pricing. Not because they lack ambition, but because the right foundations are simply not in place. And it often starts with something surprisingly basic.
There are no clear goals to aim for
The first reason companies underperform on pricing is surprisingly simple. They do not set proper pricing goals.
Goals give direction. They tell your organisation what pricing is actually supposed to achieve: more margin, faster growth, better price perception. Without them, pricing decisions happen in a vacuum. Teams react to market pressure instead of steering towards a defined outcome.
Aegon is a strong example of what it looks like when goals are set properly. The central pricing team had one clear mission: add as much value as possible to the organization. Each business line then determined its own direction, choosing between steering on margin or on volume. Progress was discussed regularly in a dedicated pricing board, where teams presented results and shared lessons learned. The structure made pricing not only more professional, but also more manageable.
From our State of Pricing research, we can conclude that only 3 in 10 companies work with specific and measurable pricing goals. Among frontrunners like Aego, this is non-negotiable. For the majority of organizations, pricing remains a moving target with no finish line.
Pricing strategy exists on paper, not in practice
Having a strategy is not the same as having one that actually works. Many organisations have rough guidelines, but no coherent plan that translates into consistent decisions across the business.
The problem runs deeper than documentation. In most companies, pricing is still primarily based on internal instincts or cost-plus logic. Value-based pricing works the other way around. It starts with the customer. What do they value? What are they willing to pay for it? That insight becomes the foundation of the price, not a final check at the end.
Ikea applies this principle consistently. Before a product is designed, the price target is set. Every material choice and production decision follows from that starting point. Most organisations do the opposite: they develop, add features, and then figure out what to charge. Pricing becomes a finishing touch rather than a strategic starting point.
Customers are not given meaningful choices
Price differentiation is one of the most powerful tools in pricing. It means offering customers different versions of a product or service at different price points, so each segment can choose at the level that matches what they value most. Done well, it lets you serve more customers without undercharging the ones who would happily pay more.
In practice, our State of Pricing research shows that 83% or organisations are not using it to its full potential. Most default to a single offer at a single price. Basic-Fit is a strong counterexample. The gym chain knows exactly which features are must-haves for its members and which extras create room for a higher tier. By introducing a more expensive membership with add-ons like bring-a-friend access and membership freezing, they unlocked significant revenue growth without losing their core base.
Making that kind of differentiation work requires a thorough understanding of what customers actually value in your offer and how much they are willing to pay for it.
There is no real insight into what customers want to pay
Price differentiation and willingness to pay are closely linked. You cannot offer the right options at the right price points without first understanding what your different customer segments actually value. Yet according to our State of Pricing research, only 13% of companies know exactly what customers value and how much they are willing to pay for it. Without that knowledge, you are pricing blind. You might be undercharging for features customers love and overcharging for things they barely notice.
OHRA is a good example of what research-led pricing looks like in practice. When developing their Physio Carry-Over Service, a service that lets customers carry unused physio treatments into the next year, they did not simply ask “would you buy this?”. Instead, they ran a choice experiment in which customers choose between different packages at varying price points. Those insights gave OHRA the confidence to launch, and the campaign delivered more than 7% growth in their total customer base.
It is also worth considering sustainability angle. Many companies today position sustainability as a core part of their value proposition. But how much are customers actually willing to pay for it? The answer is rarely what organisations assume. Without proper research into willingness to pay, you risk either overpricing a proposition customers do not value enough, or leaving money on the table from customers who would pay more for a genuinely greener option.
Discounts are given away, not managed
Discounts are supposed to be a tool. In most organisations, they have become a habit. According to our State of Pricing research, they are given under pressure, in inconsistent amounts, without clear governance and without measuring the long-term effect on margins.
That last part is often underestimated. Premium brands that rely on frequent or deep discounts gradually train their customers to wait for the sale. GAP is a well-known example. Years of aggressive promotions eroded the brand’s premium positioning to the point where buying at full price started to feel like a mistake. Once that perception sets in, it is very hard to reverse.
Smart organisations only give discounts in exchange for something. A longer commitment, higher volume, faster payment. They set clear rules about who can offer what. And they measure every promotion to understand whether it actually worked.
Price communication is an afterthought
A price increase is not just a number. It is a message. And how you frame that message determines whether customers accept it or walk away.
Slack handled this well during a recent price increase. Rather than announcing a higher cost, they reframed it entirely. They reminded customers that this was the first increase in eight years, offered existing users the option to prepay at the old rate, and connected the new price to a concrete list of added features and integrations. The increase felt justified because the story around it was well constructed.
The companies that do it well understand that customers do not resist higher prices as much as they resist the feeling of getting less for their money. Justify the increase. Connect it to added value. Give customers time to adjust. These are basic principles of how people process and accept change.
The foundations are not in place
Even when organisations want to improve their pricing, they often lack the basic infrastructure to do so. Without clean data, you cannot analyse the impact of your pricing decisions. Without governance, pricing choices get made inconsistently across teams. Without a clear owner, pricing gets lost between departments.
The organisations scoring highest on pricing maturity have all three in place. They treat pricing like any other strategic function: with investment, structure, and accountability.
The bottom line
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The pattern is clear. Missing goals, a strategy that never leaves the drawing board, little insight into what customers will pay, discounts handed out without structure, and pricing data that sits unused. These are not isolated problems. Together they explain why, as our State of Pricing research shows, 9 out of 10 organizations are not getting the most out of pricing.
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The good news is that it can be done differently. The frontrunners prove it. They set clear goals, base decisions on research, give customers meaningful choices, and build the data foundations to learn and improve over time.
Want to know where to start for your company?
What the replay of the State of Pricing webinar. Or download the full State of Pricing report and see how you compare to the market.