At many private equity-backed companies, pricing happens in bursts. Costs rise, the team calculates the impact, a price increase goes out, and everyone returns to their day-to-day operations until the next cost change forces another round.
That reactive cycle is where much value gets lost. According to Scott Green and Kenny Stoll, CEO and COO of practitioner-led profit optimization consultancy Profit Drivers, the companies that capture pricing value consistently are not the ones with the best strategy or the newest software. They are the ones that build the processes to carry out pricing decisions every day.
“Pricing is not a project. Pricing is a discipline.” — Kenny Stoll, COO at Profit Drivers
A reactive approach creates constant interruption. Each new wave of cost pressure pulls the team away from their activities, causing progress to reset.
“If I go to raise prices, that requires me to pause previous initiatives I was working on. That results in lost momentum.” — Scott Green, CEO at Profit Drivers
Commercial discipline is where too many middle-market portfolio companies fall short in their pricing strategy and execution. Most companies are already pricing in a functional sense. What they lack is the structure to do it consistently.