Five pricing questions every CEO should ask

Of all the levers a CEO can pull, price is the fastest. A small increase can do more for profit than months of extra sales effort. Yet in many small companies prices are set once, at launch, and then rarely touched again. At Sony I worked on price setting across European markets, and the same questions apply to a startup with ten customers. Here are the five I would ask first.

1. Do you know your real margin on each sale?

Not the theoretical one, the real one. Include delivery, payment fees, discounts, returns, after-sales support and the time your team spends on each client. Many companies discover that their best-selling product or their biggest client is the least profitable. You cannot price well until you know what each sale really costs.

2. What is the outcome worth to your customer?

Customers do not buy your product, they buy what it does for them: time saved, risk reduced, revenue gained. If your service saves a client £20,000 a year, a price based only on your costs probably leaves money on the table. Start from the value you create, then check it against your costs, not the other way round.

3. Who are you really compared with?

Every price is judged against an alternative. Sometimes it is a direct competitor, sometimes it is doing nothing, sometimes it is hiring someone in-house. Know which alternative your customer has in mind. If you only compare yourself with the cheapest competitor, you will end up competing on price alone.

4. When did you last change your prices?

Costs have risen for almost everyone in recent years. If your prices have not moved, your margin has quietly shrunk. Raising prices does not have to be dramatic: start with new customers, add value to justify the change, and give existing clients clear notice.

5. Is your price easy to understand?

A confusing price list slows down every sale. Fewer options, clear packages and a simple explanation of what is included make it easier to say yes. If your sales team needs ten minutes to explain the price, the problem is the price list, not the team.

Pricing is not an accounting exercise, it is a strategic decision. If you want a second opinion on yours, let's talk.