Strategy
Build a Board That Improves Decisions
The quality of governance becomes visible in the choices a company makes, the assumptions it challenges and the speed with which it responds to contrary evidence.
Customers and growth
Pricing Power Has to Be Earned Again
An executive pricing agenda should connect the customer’s economics with the company’s economics. The strongest price is one the buyer can defend after the purchase.
The value question returns
A price increase can improve revenue while weakening the reasons customers chose the business. The effect may take time to appear, particularly where contracts, switching costs or operational dependence slow a buyer’s response. Executives should therefore examine the quality of the value proposition alongside the immediate margin result. A customer who remains is not necessarily a customer who would choose the company again.
The American Customer Satisfaction Index’s August 2026 release reported a sharp decline in U.S. customer satisfaction in the second quarter. That broad indicator cannot diagnose an individual company or establish future customer losses. It does provide a timely reason to inspect whether stronger reported economics are accompanied by a better customer experience.
Our editorial recommendation is to treat pricing as a joint commercial and operating decision. Product, sales, service and finance should agree on what the customer receives, what it costs to provide and which parts of the offer justify a premium. A price committee that sees only discounts and gross margin will miss much of that relationship.
Understand the customer’s alternative
Begin with the decision the customer is making. A business buyer may compare the offer with another supplier, internal production, postponement or doing without the service. Each alternative changes the meaning of value. A lower purchase price can be expensive when it creates delay, additional labor or risk. A premium offer can be unattractive when its extra features do not change the buyer’s outcome.
Ask customers to explain the economic consequence of success and failure. What work does the offering remove? What uncertainty does it reduce? What result becomes possible? Look for evidence in customer operations, not just favorable interview language. Where the value cannot be measured precisely, identify the assumptions and agree on how both parties will judge performance.
Segment by the problem and the service requirement as well as account size. Two customers buying the same product may require very different levels of support, customization and urgency. A price architecture should make those differences understandable. Otherwise a standard discount policy can subsidize expensive service for some accounts while overcharging simpler accounts that are easier to lose.
Design an offer customers can compare
J.D. Power’s 2026 U.S. Insurance Shopping Study reported that 53% of auto-insurance customers shopped for coverage, down from 57% in the prior year. That is a sector-specific finding, not a universal measure of price sensitivity. It illustrates why retention alone deserves a closer look: customers may be actively examining alternatives while still appearing on the revenue ledger.
Give each offer a clear core promise and an explicit set of options. If faster delivery, dedicated support or additional flexibility costs more to provide, explain the commercial choice. Avoid constructing packages that make a basic comparison unnecessarily difficult. The customer should be able to identify the service level required and understand the financial consequence of choosing it.
Use sales feedback to identify confusion, but check the evidence before responding with another discount. A lost opportunity may reflect an unsuitable offer, a weak explanation, an operational concern or a genuine price gap. Record the reason with enough discipline to separate these possibilities. A generic lost-on-price category can become a convenient explanation that prevents the organization from learning.
Treat transparency as part of the product
The FTC’s guidance on its Rule on Unfair or Deceptive Fees explains the requirement to disclose total prices upfront for covered live-event ticketing and short-term lodging offers. The rule took effect on May 12, 2025 and has a defined sector scope. It is a concrete example of how pricing presentation itself has become a business responsibility.
Beyond any applicable requirement, executives should inspect the full journey from advertised offer to renewal. Look for fees, conditions or exclusions that customers encounter too late to make a useful comparison. Evaluate the actual invoice as carefully as the sales presentation. Surprise may produce a short-term collection; it rarely provides a persuasive explanation of value.
Give customers a clear route to resolve a mismatch between the promise and delivery. Service recovery should address the failure and its cause, with commercial discretion proportionate to the harm. If employees repeatedly grant concessions for the same problem, the organization has a product or operating issue that pricing cannot repair on its own.
Test the economics after the change
Before a significant price change, define the observations that would support or challenge the decision. Track realized price, volume, renewal, complaints, service cost and customer mix. Keep promotional effects and changes in the offer visible. A rise in average price can result from losing lower-priced customers, which may or may not improve the long-term business.
Use controlled or phased tests where commercially appropriate and permitted. Compare similar customer groups and allow enough time for the relevant purchase or renewal cycle. Avoid claiming a durable result from a brief period in which customers have had little opportunity to respond. Finance should reconcile the margin benefit with the costs of concessions, support and acquisition.
At the executive table, ask whether the business can explain its price through the customer’s experience after purchase. That question brings operating reliability into the commercial discussion and forces a clearer account of differentiation. Pricing power becomes more durable when the organization continues to earn preference each time the customer has a real choice.
Evidence & further reading
Go to the source.
- National ACSI: Quarter 2, 2026American Customer Satisfaction Index · 2026-08-11
- 2026 U.S. Insurance Shopping StudyJ.D. Power · 2026-06-04
- The Rule on Unfair or Deceptive Fees: Frequently Asked QuestionsFederal Trade Commission · 2025
Executive analysis informed by the linked sources. Hypothetical examples are identified in the text. Published 3 October 2026.
Continue the conversation
Read next
Strategy
Growth Is Uneven. Your Strategy Should Be Precise.
The next planning cycle calls for a sharper view of customers, cash and commitment. A global forecast is the beginning of that work.
Strategy
The Supply Chain That Can Change Its Mind
Resilience earns its place in the operating model when alternatives are qualified, affordable and ready to use.