Pricing Foundations
At a glance:
Most companies don’t “have a pricing strategy.” They have a series of reactions. A competitor drops price, a big customer yells, sales misses the quarter – then prices move. Proactive pricing flips that so you decide when, where, and how to change price ahead of the noise. And, you govern those decisions so they’re consistent, fair, and profitable.
WHAT IT IS
Proactive pricing is a deliberate, calendar- and rule-driven approach to setting and changing prices (backed by data, cross-functional input, and clear decision rights). Reactive pricing is inbox-driven (discounts to “save” deals, rushed responses to competitor moves, one-off exceptions. Governance is the scaffolding around it all: who sets list prices, who can approve deviations, what guardrails apply (margin floors, discount bands, dynamic rules), and how results get monitored and adjusted.
WHY IT MATTERS
When pricing is proactive and governed, small purposeful moves in net price tend to fall to the bottom line instead of disappearing into chaos. Proactive pricing is also how you safely use more advanced levers (like index-linked updates, segmented price books, and dynamic pricing) without blowing up trust or creating internal knife-fights over “who owns price.”
CASE FILE
San Francisco Giants: Price the Pitcher – Dynamic Seats in the Ballpark
“A Monday Pirates game is not the same as a Dodger Sunday, so pricing them the same way doesn’t make a whole lot of sense.”
– Russ Stanley, Giants ticketing chief, on adopting dynamic pricing
Setup. The MLB has long known that willingness-to-pay swings with opponent, starting pitcher, day of the week, weather, and promos. Static pricing left money on the table to must-see games and seats unsold on for less popular matchups.
Move. The Giants became the first pro team to deploy dynamic pricing (pilot in 2009, moving park-wide in 2010) using Qcue software. They updated prices daily by section/seat while guarding season ticket holder value.
Outcome. Pilot: +25,000 tickets and +$500K. First full season: +~$7M revenue. Teams across the MLB adopted the approach.
Lessons.
Harness data loops for dynamic pricing. For the Giants, this means treating each game as a market. They feed data like sell-through pace, opponent/pitcher, day, weather, and secondary-market signals into a daily model to raise the price when pace outperforms forecast and relax when it lags.
Consider bundling and unbundling. As an example: keeping season tickets and mini-plans as commitment bundles (gaining predictable revenue for perks) while letting single-game seats float dynamically for last-minute yield.
Framework:
OPERATOR CHECKLIST
◻️ We have a written pricing calendar (e.g., annual list review, quarterly promo plan) and actually enact it.
◻️ We have a named pricing owner or team, plus a cross-functional committee that meets at least quarterly.
◻️ Our list prices, discounts, and surcharges live in a single source of truth, not scattered spreadsheets.
◻️ Every segment/channel has defined price bands (floor/target/ceiling) and discount ladders.
◻️ Exceptions above a threshold (e.g., >X% discount or below Y% margin) require approval and are logged.
◻️ We track realized price and pocket margin dispersion by product and segment, not just average selling price.
◻️ Competitor moves and input shocks feed into pre-defined playbooks, not ad-hoc “fire drills.”
◻️ We document any dynamic or rules-based pricing logic: signals, bounds, and human overrides.
◻️ We can explain price differences between customers in terms of value, cost-to-serve, or segment – not “because sales pushed for it.”
◻️ We review pricing outcomes at least quarterly and retire rules or promos that don’t move margin or mix in the right direction.
◻️ When we run gross margin analysis on a project-by-project or product line basis, the ranges represented reflect our intended price strategy.
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Ask: Are most prices set at minimum approval levels? Are margins for the same product wildly different across customers? Do competitors anticipate your moves while theirs surprise you? If the honest answer is “yes,” you’re in reactive territory. That means that decisions are made deal-by-deal, to chase volume, with little concern with or feedback into strategy. Proactive pricing runs on a calendar, structured analytics, and explicit rules for when to move and when to hold.
Takeaway: If most pricing discussion happens after someone complains, you don’t have a strategy – just reactions.
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Your price band is the corridor between your floor and your ceiling. Strategy decisions shift or reshape that band (changing your positioning, re-tiering offers, or resetting list levels by segment). Tactics move you within the band (discounts, del-specific exceptions, promotions. Both matter, but trouble starts when tactical decisions quietly redefine strategy.
Takeaway: Write down your price band and who owns it, so tactical moves like repeated “one-time” discounts don’t silently drag strategy downhill.
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Scheduled price reviews and indexing. It’s becoming more and more common for industrial and B2B companies to build annual or semi-annual price reviews into contracts, sometimes indexed to inputs or inflation measures. This moves negotiations from surprise increases to expected, structured conversations.
Takeaway: Move from emergency hikes to pre-planned reviews tied to data.Segmentation-based price architectures. Instead of a single list + random discounts, proactive pricers build differentiated price books by segment, channel, or region – with explicit fences. Leaning into value-based, segmented pricing means capturing more high-WTP pockets while still serving more value-sensitive segments.
Takeaway: Price first by segment and value drivers, then govern discounts. Don’t let deal-by-deal pricing art become accidental segmentation.Rules-based and dynamic pricing. You might have noticed an uptick in price tags that…don’t have an actual price on them. Dynamic pricing ranges from simple rules like raising prices when capacity is tight or demand spike to algorithmic systems that adjust prices based on signals like demand, competition, and inventory. In retail and B2B, well-implemented dynamic pricing can deliver 2-5% sales growth and 5-10% uplift if it’s tied to clear rules, human oversight, and customer-friendly comms.
Takeaway: Treat dynamic pricing as responses to specific signals, not a black box that changes prices because it can. In other words, stable prices build trust while dynamic prices acknowledge that you’re exposed to and responding to the market.
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Personalized dynamic pricing and frequent price changes can backfire fast if customers think they’re unfair or opaque. Perceived unfairness (more common in fully individualized pricing rather than segment-based dynamic pricing) leads to anger, reduced trust, and lower purchase intent.
Takeaway: Vary prices when it makes sense, but make sure you have guardrails and a fairness story you’d be comfortable putting on your website.
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Here’s the loop: Set hypotheses, implement, measure impact on volume/mix/margin, then adjust rules and governance. Even if you’re using state-of-the-art “intelligent pricing” and AI-supported models, they’ve got to be supported by organizations that regularly revisit pricing plays and train team members to use them.
Takeaway: Proactive means running experiments on purpose, not changing something once in 2022 and calling it a strategy.
SIGNAL TO WATCH
If most price changes in your business are triggered by someone else’s move, you need to revisit (and solidify) your own pricing calendar, models, or trigger thresholds. Or, acknowledge your company is a price taker.
ONE QUICK ACTION
Take one product line and write a one-page “pricing ground rule”: target margin band, who can approve what, when list prices are reviewed, or what triggers an off-cycle change. For 60 days, refuse any exceptions outside that sheet.
COMMON TRAPS
Calling panic moves “dynamic pricing.”
Letting exceptions become the rule.
Turning on an AI or rules engine without clear floors, ceilings, and fairness constraints.
No one owns the analysis and margin leakage shows up only when finance closes the quarter.
Proactive changes roll out without customer-facing explanations.
Experiment:
LEVERS: PROACTIVE VS. REACTIVE PRICING GOVERNANCE
What it’s for: Help a team stop “reactive pricing” by choosing 1–2 governance levers to implement in the next 90 days so price changes become planned, rules-based, and repeatable instead of ad hoc.
Who it’s for: GM/CEO + Finance/RevOps + Sales/Ops lead who owns pricing decisions and needs a simple way to improve pricing discipline without launching a full pricing program.
What it does: Allows you to pick one or two pricing governance levers you can actually execute in 90 days, define the move clearly (“what will change”), assign an owner, and set the minimum guardrails required for it to stick.
Use when you need…
Clarity: Converts “we should be more proactive” into one specific governance change.
Speed: 90-day scope prevents perfectionism and forces a shippable pilot.
Strategic insight: Creates a repeatable pricing operating habit that compounds (cadence + guardrails + learning).
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