Is your margin going backwards? time for a pricing reset
By Sue Hirst
If your input costs have moved in the last 90 days—and your pricing hasn’t—your margin is already under pressure.
The problem is, most companies don’t see it immediately.
Revenue looks stable. Volumes might even be holding. But beneath the surface, profitability is quietly eroding. By the time it shows up clearly in the P&L, you’re already playing catch-up.
In the current oil-driven cost environment, that delay can be expensive.
The Silent Margin Squeeze
Cost inflation doesn’t hit all at once. It creeps in through:
- Fuel and logistics costs
- Supplier price increases
- Energy-intensive production inputs
- Indirect cost escalations
But pricing? Pricing tends to lag.
Why?
Because businesses hesitate. They worry about:
- Customer pushback
- Competitive positioning
- Sales team resistance
- Volume loss
So they wait.
And that gap between cost increase and price response is where margin disappears.
Why Most Pricing Responses Fail
Even when companies do act, the approach is often flawed.
Common mistakes include:
1. Blanket Price Increases
Applying a flat 5% across all customers and products ignores reality. Some segments will absorb more. Others will churn.
2. Moving Too Slowly
Phased increases can work—but too slow, and you never catch up to cost movements.
3. Ignoring Discount Leakage
Many businesses increase list prices while discounts quietly expand—canceling out the gain.
4. Lack of Sales Alignment
If your sales team isn’t equipped to explain and defend pricing changes, execution breaks down.
Pricing Is Your Fastest Lever
In times of volatility, companies often focus on cost-cutting.
But pricing is faster.
- You don’t need to restructure operations
- You don’t need capital investment
- You don’t need months to see impact
A well-executed pricing reset can recover margin in weeks—not quarters.
What a Pricing Reset Actually Looks Like
A pricing reset is not just “put prices up.”
It’s a structured, targeted approach:
1. Identify Where Margin Is Leaking
- Which products are underpriced relative to cost increases
- Which customers are over-discounted
- Where price hasn’t kept pace with input costs
2. Segment Your Customers and Products
Not all customers are equal.
- Where do you have pricing power?
- Who is price-sensitive vs value-driven?
- Which segments can absorb increases with minimal risk?
3. Design Targeted Price Actions
Instead of one blunt move:
- Different increases by segment
- Different timing by market
- Clear thresholds for negotiation
4. Equip Your Sales Team
Execution is everything.
Your team needs:
- Clear rationale for changes
- Simple messaging
- Confidence in holding the line
5. Put Governance in Place
Without control, pricing drifts back.
- Approval thresholds for discounts
- Visibility into deal-level margin
- Ongoing monitoring of price realization
The Opportunity Most Companies Miss
Here’s the upside: most organisations have more pricing power than they think.
In uncertain markets:
- Customers expect some level of increase
- Competitors are facing the same cost pressures
- Value often matters more than price alone
Companies that act decisively don’t just protect margin—they often improve it.
A Simple Test
Ask yourself:
- Have our costs increased in the last 90 days?
- Have we fully passed those increases through?
- Do we know where margin is leaking today?
If the answer isn’t clear, there’s a high chance your margin is already going backwards.
From Insight to Action: Where a CFO Adds Value
This is where strong financial leadership makes the difference.
A CFO (or experienced commercial finance partner) brings:
- Clear visibility into margin by product, customer, and channel
- Discipline in pricing governance and discount control
- Data-driven decision-making rather than reactive price changes
- Alignment between finance, sales, and leadership
Most importantly, they ensure pricing becomes a managed process—not an ad hoc reaction.
Need Help Turning Strategy into Results?
Recognising the issue is one thing. Fixing it—quickly and without damaging your customer relationships—is another.
If you suspect your margin is under pressure, the fastest step is a focused diagnostic:
- Identify exactly where margin is leaking
- Quantify the financial impact
- Prioritise the highest-value pricing actions
From there, a structured pricing reset can be implemented in weeks—not months.
If you’d like a practical view of where your biggest opportunities sit, I’m happy to walk through your current pricing approach and highlight where margin can be recovered.
Is your margin going backwards? It’s time to take control—and reset your pricing before the market does it for you.
