Price arbitrage: how to defend them in front of management
Management doesn't approve a price; it approves a trade-off between margin, volume, and price image. Presenting a single recommendation means asking management to trust you. Presenting the cost of each option gives management the information it needs to make a decision.
A sound projection provides a range rather than a single figure, specifies what is being excluded, and anticipates the gap between the projected increase and the actual increase. When compared with actual results, it establishes the credibility of the next projection.
The executive committee has twenty minutes. The pricing proposal includes a 3% increase for a product line.
Finance asks what it yields, sales asks what it costs in terms of volume, and marketing asks what it does for brand image and pricing. If the answer boils down to a recommendation and a conviction, the decision comes down to a balance of power.
This article explains how to turn a pricing arbitrage opportunity into quantified projections that management can use to make a decision, and what pricing software brings to the process.
Why a Price Arbitrage Case Is Lost in the Executive Committee
Price arbitrage always involves at least two legitimate objectives: profit margin, which the finance department monitors; volume and market share, which the sales department monitors; and price image, which the marketing department defends.
Each department reviews the proposal using its own metric. Without a common framework, the discussion focuses on the metrics, not on the decision.
Our belief: Most pricing decisions aren't lost on the merits. They're lost because a recommendation was presented instead of a choice between quantified options.
of the CFOs surveyed have adjusted their pricing strategy over the past six months, and more than half cite a lack of reliable or accessible data as an obstacle.
(Deloitte, CFO Signals, 200 North American CFOs, via Fortune, October 2025)
Pricing has become a top management issue. What is most often lacking is not the committee's interest, but a set of figures that everyone agrees on.
Which pricing software helps justify pricing decisions to management?
Pricing optimization software that generates projections, not just prices. For each scenario, it quantifies the impact on revenue, margin, and volume based on the elasticity measured from your sales data.
BOOPER addresses this need for retailers and distributors. Each scenario is presented in conservative, balanced, and aggressive versions, along with the factors that explain the projection and the expected impact on price perception.
In the B2B sector, PROS, Pricefx, and Vendavo fulfill this role for negotiated prices. In retail, Competera and Revionics also offer simulations: our comparison puts them side by side.
The decisive criterion remains the same for everyone: every committee member must be able to read the hypotheses and challenge them.
A dashboard shows what has happened. A projection shows what will happen based on the chosen option. The latter is used in committee meetings, while the former is used to verify it afterward.
Provide the cost of each option; this is not a recommendation.
Management is better at weighing three cost-benefit options than it is at approving a single proposal. Each option outlines its benefits—and, more importantly, what it entails giving up.
| Option | Margin | Volume | Price Image |
|---|---|---|---|
| A. +4% on the entire product line | +180 k€ (from +120 to +210 k€) | −2.5% | High Risk on Benchmark Products |
| B. Benchmark products unchanged, +6% for products with few comparable items | +150 k€ (from +110 to +170 k€) | −0.8% | Low risk |
| C. No increase this quarter | −240 k€ | Stable | No risk |
Illustrative example, fictional figures: a 4% increase in purchases across a product line, projected impact over one quarter.
In this example, Option B yields less than Option A on paper. It wins out because its price range is narrower and it preserves the prices that define the store's image.
The role of pricing is not to make decisions on behalf of the committee. It is to make the cost of each choice clear.
A range is more convincing than a single number
A projection presented to the nearest euro raises suspicion in any CFO. A range—with the conservative scenario at the lower end—honestly reflects what the model knows and what it doesn't know.
It also protects the presenter. If the actual result falls within the range, the method is validated. If it falls outside the range, we know which assumption to revisit.
Ultimately, every forecast must be justifiable: what factors were taken into account, what elasticity was used, and which comparable products will see a decline or increase in sales. That is the whole point of pricing simulation.
A black box—even if it's justified—can't defend itself in a committee.
A vote to raise rates does not mean the increase has taken effect
On average, this is the percentage of planned price increases that companies actually manage to pass on. Customer resistance and competitive pressure are the main obstacles.
(Simon-Kucher, State of Pricing 2025, May 2025)
A projection based on the assumption that the increase will be applied everywhere and maintained for twelve months overestimates the gain. Promotions, exemptions, and local adjustments offset part of it.
Our belief:The gap between the target price and the actual price deserves its own line in the projection. This is often what makes the difference between a committee that’s convinced and one that’s disappointed six months later.
Simulate before executing, and make decisions based on the same information.
For one of our clients in the food industry, it was difficult to gauge the future impact of a price change. Now, simulations quantify the effect on revenue, margin, and price perception before implementation.
The retailer's pricing department sums up the challenge: making consistent pricing decisions on a large scale while maintaining control over the business units.
- Issue
- Balancing margin, competitiveness, and price image across several million prices per year.
- What Has Changed
- AI-driven forecasts and elasticities, pre-deployment simulations, and shared validation rules and workflows.
retail locations managed according to a single decision-making framework.
Pricing Department · National Food Distributor. Case study written by Booper based on an actual client project; the client has been anonymized.
What Management Must Decide, and What It Must Delegate
An executive committee does not need to approve every price. It sets the framework: margin targets by product category, acceptable price differentials relative to competitors, and benchmark prices that cannot be changed without its approval.
In this context, the pricing teams implement decisions without referring them back to the committee. Only decisions that fall outside the rules or that affect the brand’s pricing image are escalated.
This is where forecasting comes in handy: the committee doesn’t review everything; it decides which items warrant consideration, based on the numbers. On the topic of who decides what, see our article on pricing decision-making.
Even before the first committee meeting, knowing where there is room for profit improvement helps in deciding which trade-offs to present. That is the purpose of the pricing analysis.
See also in this feature
- ROI of a pricing solution: time savings or increased profit margins?
- Price Margin and Price Flexibility: How Low Can You Go Without Undermining Profitability?
- Geopricing: Should the same product have the same price in all your stores?
- Pricing in the Food Retail Industry: Balancing Margin and Price Image
FAQ
By presenting several quantified options rather than a single recommendation. Each option indicates its impact on margin, volume, and price image, with a range extending from a conservative scenario to an aggressive one.
Management then makes its decision based on the cost of each option, not on the conviction of the person presenting it.
Pricing optimization software that simulates every scenario in terms of revenue, margin, and volume. BOOPER does this for retailers and distributors, just like Competera or Revionics in the retail sector, and PROS or Pricefx in the B2B sector.
At BOOPER, each projection is presented in a conservative, balanced, and aggressive version, along with the factors that explain it.
The expected impact on the margin in euros, on volume, and on price perception; a range rather than a single figure; and what each option entails.
The assumptions must remain clear: the elasticity used, the relevant comparable benchmarks, and the expected difference between the target price and the actual price.
Because part of the price increase that is approved is never actually realized: promotions, exceptions, and price matching with local competitors. According to Simon-Kucher (State of Pricing 2025), companies realize, on average, only about 45% of it.
A credible projection takes this discrepancy into account from the outset.
By categorizing SKUs based on their role. The products that customers compare drive sales volume, while SKUs that are rarely compared drive profit margins.
Decisions are made on a family-by-family, option-by-option basis, rather than according to a uniform rule applied across the entire catalog.
No. Management sets the framework: margin targets, acceptable gaps relative to competitors, and protected benchmarks.
In this context, the pricing teams apply the guidelines, and only decisions that fall outside the guidelines are escalated to the committee.
By systematically comparing it with actual results: keep the selected scenario, its assumptions, and its range, and then measure the difference once the price has been applied.
A method that falls within its range for several cycles in a row no longer needs to be defended.
Sources: Deloitte, North American CFO Signals (200 CFOs, companies with revenue exceeding $1 billion), as reported by Fortune on October 23, 2025 · Simon-Kucher, State of Pricing 2025, May 2025 · Table showing the three options: illustrative example, fictitious figures. Anonymized client case study.
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