Business Advisory
Some of the best advisory work begins on the floor
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Business Advisory
Pricing is a strategy decision that finance is asked to justify afterwards
Of all the levers available to a business, price moves profit fastest. It is also the one most often delegated to instinct and defended after the fact.
Anandhakrishnan BFounder5 min readA one per cent improvement in realised price usually moves profit more than a one per cent reduction in cost, and it takes less time. Yet cost reduction gets the programme and price gets a conversation.
Start with realised price, not list price
Very few businesses know what they actually receive. Between list price and bank credit sit discounts, schemes, credit notes, freight absorbed, and the cost of the extra sixty days. Calculate realised price per customer for a year and the range is usually wider than anyone expected.
Then ask who is being subsidised
- Which customers sit below the average, and why, volume, history, or a conversation nobody has had?
- Which products are priced from a cost sheet that has not been rebuilt since input costs moved?
- Where has a discount become permanent because it was never given an end date?
The answers rarely require a price increase across the board. They require three or four specific corrections, made deliberately, with the commercial consequence understood before the conversation happens.
Price is a decision. A costing sheet is evidence. Do not confuse the order.
Written by
Anandhakrishnan B
Founder · B.sc Physics, PGDMIR · Nearly three decades in finance, governance and operations
Has overseen the finance and administrative functions of more than 30 companies across diversified industries.
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