Why Do So Few Companies Actually Manage Their Prices?

The Most Cost-Effective Tool in the Marketing Mix

Product, price, distribution, and communication: the four traditional pillars of the marketing mix do not all carry the same implementation costs. Improving a product requires time and investment. Securing a new distribution channel involves months of negotiations. A communication campaign ties up a budget even before it’s clear whether it will generate results.

As for the price, changing it costs nothing. An adjustment can be decided one morning and have an immediate effect on the margin as early as the next sale. No other lever in the marketing mix offers this combination of ease of implementation and direct impact on the bottom line.

This finding is not new, and that is precisely what is striking: more than twenty years after its publication, it remains true, is widely cited, and yet is largely ignored in practice. Most companies continue to invest heavily in customer acquisition and retention—two legitimate strategies—while letting price, the most profitable of the four, run on autopilot.

This paradox is not a matter of competence. The marketing and sales teams that lead these companies are experienced. It is a matter of governance: unlike the product or communications, pricing usually does not have a clearly designated owner.

You only need to compare the budgets to see the imbalance. An acquisition campaign, a media plan, a packaging redesign: each of these projects has its own dedicated budget, a designated manager, and its own performance metrics. Pricing, on the other hand, generally has neither its own budget line item nor its own standalone performance metric—it is treated as a consequence of other decisions rather than as a decision in its own right. This asymmetry in treatment, more than the actual complexity of the subject, explains why the most profitable lever in the marketing mix remains the one that receives the least investment.

What "no one owns the price" means

In many companies, a price exists simply because it was set at some point—often when a product or product line was launched—and no one has since formally taken on the responsibility of keeping it current. It’s listed in a spreadsheet, a product sheet, or an ERP system. It is modified on an ad hoc basis: a discount granted to close a sale, an adjustment decided in a meeting without a clear framework, or a price increase automatically passed on to reflect a rise in material costs.

This isn't negligence. It's the result of an organizational structure in which pricing is treated as a technical matter rather than a strategic decision. It falls partly under sales, partly under marketing, and partly under finance—and so, in practice, under no one's specific responsibility.

Large corporations have often addressed this issue by creating a dedicated pricing function—sometimes an entire team reporting to the sales or finance department. Mid-sized companies and SMEs, however, generally do not have this option—neither the business volume that would justify it at first glance nor the budget for specialized hiring. The issue therefore remains diluted, and it is precisely this dilution that proves most costly, since pricing continues to exist and weigh on margins without anyone actively managing it.

Three Reasons Why Price Remains a Blind Spot

This lack of direction is no accident. Three mechanisms—either individually or in combination—recur in virtually all organizations that have never established a structured pricing governance framework.

This figure should be interpreted with the caution it warrants: it does not mean that 41% of companies “have no pricing function,” but rather that they operate at the most basic level of maturity—without detailed segmentation, without a value-based approach, and with pricing managed more as a formality than as a decision. This represents a regression compared to 2019, not stagnation: the situation has deteriorated rather than improved over the period, despite a growing awareness of its importance.

The Cost of a Price That Isn't Managed

The cost of an unmanaged price is never reflected in a single line item on the income statement. It spreads, unseen, across multiple areas at once.

• Profit lost in silence. Every price point that could have been captured without losing volume—but wasn't, due to a lack of analysis—is profit lost forever, never recorded as an identifiable loss of revenue.
• A pricing strategy that drifts. Without regular review, some prices become too high in the eyes of the market without the company realizing it, while others become too low, preventing the company from reaping a measurable commercial benefit.
• Slow decision-making in the face of market fluctuations. Rising material costs, a competitor making moves, inflation picking up again: without a review process, the response is always too late—decided in a rush rather than anticipated.
• An internal debt of trust. When no one can explain why a price is what it is, each department feels justified in challenging it—which further fuels the silo described above.

What makes this cost particularly insidious is its cumulative nature. A margin point lost in one year isn’t made up the following year—it adds to the loss the year after that, and so on, as long as no one revisits the issue. Over five or ten years, the gap between a company that has managed its pricing and one that has let it slip becomes substantial, without any single event ever being the identifiable cause.

The issue of the inherited price—which has never been revised since the product’s launch—deserves a discussion of its own; it is the subject of another article in this series.

What does a company that takes pricing seriously look like?

You don't need a ten-person pricing department to move beyond flying by the seat of your pants. Four key indicators distinguish an organization that has structured its approach to pricing from one that is still reacting to it.

To put it this way: none of these four columns on the right requires dedicated software or a dedicated team. They require a simple organizational decision: someone must be able to answer, at any time, the question, “Why is this price what it is?”

Build a pricing function without waiting to hire

These four steps are enough to move beyond flying by the seat of your pants, even without hiring new staff. For the next step—defining specific roles, a RACI matrix, and the processes of a structured pricing organization (typically once the function is already up and running)—Booper has published a dedicated guide: Structuring an Effective Pricing Organization. This guide stops short of that, focusing on the initial assessment and realization; the other guide picks up where this one leaves off, covering the organizational mechanics.

Four Common Misconceptions That Hinder Awareness

• “We don’t have the critical mass for a pricing function.” False: The mandate and the pace matter more than the size of the team. Just one person in charge makes all the difference.
• “Our price is already good; we don’t have a problem.” A price that has never been challenged is neither good nor bad—it’s simply untested. That’s exactly what ends up costing a lot without anyone noticing.
• “Changing the price is risky.” Leaving it unchanged is just as risky, but in a less obvious way: the silent loss of margin never triggers an alert.
• “This is an issue for large corporations.” The gap in pricing maturity is not primarily a matter of company size but of organizational decision-making—see the EPP/Vendavo figure above, which applies to organizations of all sizes.
• “We’ll see about that next year, once we have a clearer picture.” This delay happens every year for the same reasons—and each year of delay comes with a cumulative cost, as detailed above.

The question of who should be involved in this decision once the mandate is in place —and why it should never rest with a single individual—is the subject of another article in this series. Similarly, the issue of how to test a price change without alarming customers is discussed in detail there.

FAQ

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Also in this series

• The price isn't set in stone: why it's a dynamic variable
• Testing Your Prices Without Losing Customers: The Method
• Pricing: Why Pricing Decisions Should Never Be Left to a Single Person

Sources: McKinsey & Company, Marn, Roegner & Zawada, *The Power of Pricing*, *McKinsey Quarterly*, 2003, No. 1 · EPP (European Pricing Platform) & Vendavo, 4th Global Pricing Maturity Study, January 10, 2023