Why Are You Running Your Company Without a Pricing Team?

Pricing decisions are often reactive, based on crude cost-plus formulas or gut instinct. This approach is not just outdated; it’s reckless.

In the industrial world, no executive would dream of running a company without a robust supply chain team, procurement or an engineering department. These functions are considered the backbone of operational efficiency and business performance. Yet, when it comes to pricing—the very lever that determines profitability, market share and competitive position—many manufacturers treat it as an afterthought.

In pricing circles, we call ourselves the orphan of the marketing mix. In more than 75% of industrial firms, there’s no dedicated team, no formal pricing process, no clear ownership, no strategy. Pricing decisions are often reactive, distributed among sales, finance and product teams, based on crude cost-plus formulas or gut instinct. This approach is not just outdated; it’s reckless.

The question I pose to you is simple: Would you tolerate this level of negligence in any other core function of your business? If not, then why do you tolerate it in pricing?

The Hidden Value in Pricing

Pricing is the most powerful profit driver available to any business. A 1% improvement in price realization can yield a far greater impact on the bottom line than an equivalent improvement in cost reduction or volume growth. In fact, it is well known that that 1% increase with all other things staying constant can yield an 11% increase in EBIT.

Despite this, pricing remains one of the least understood and most underinvested areas of management. This is especially true in manufacturing, where companies have historically focused on operational efficiency, engineering excellence and cost optimization, while treating pricing as a necessary evil—a box to check, not a lever to pull.

This neglect is understandable in some ways. C-suite executives are satisfied with verifying margins and top line revenues. And yes, pricing is complex. It requires cross-functional collaboration, deep customer insights and a balance between data-driven analytics and market orientation. It’s not as tangible as a supply chain network or as visible as an engineering design or a procurement strategy. But that doesn’t make it less important. In fact, it makes pricing more critical, because getting it wrong reverberates across every part of the business: unprofitable deals, erosion of value, loss of customer trust and ultimately, financial underperformance.

The Cost of Not Having a Pricing Team

When pricing is managed as an afterthought, no one owns it—and when no one owns it, things can get irrational pretty quicky. Sales teams discount too aggressively to close deals. Product managers set prices based on costs without understanding customer value. Finance monitors margins after the fact but lacks the tools or authority to intervene upstream. The result is a patchwork of pricing decisions that lack cohesion, strategy and accountability. Imagine running your supply chain this way. Imagine if logistics decisions were made independently by each region, with no centralized planning, no integration and no data-sharing. Imagine if your engineering team developed products without understanding market needs or technological trends. The results would be disastrous. Yet this is exactly how many companies approach pricing.

The cost of this dysfunction is enormous. Companies leave millions of dollars on the table every year in lost margin, unrealized price increases and poorly negotiated contracts.

Benefits of a Dedicated Pricing Function

A centralized pricing team brings three critical capabilities to the table. First, it establishes governance and accountability. Pricing decisions are no longer left in the hands of individual departments but are aligned with corporate strategy.

Second, it leverages data and analytics to make informed, fact-based decisions. Advanced tools and software can provide insights into buying behavior, competitive dynamics and price elasticity—insights that are impossible to derive from spreadsheets or intuition.

Third, it creates a culture of value. By shifting the focus from cost-plus pricing to value-based pricing, companies can capture the worth of their products and services in the eyes of their customers.

This is not just theory; it’s proven practice. Companies that invest in pricing excellence routinely outperform their peers. There are many examples of industrial pricing champions who manage pricing with excellence. This combines the power of pricing strategy with a strong price realization backbone.

Among these companies, you will find Parker Hannifin, Schneider Electric, Bayer Corp. Science and 3M. They have higher margins, better pricing discipline and greater agility in responding to unpredictable disruptions.

Breaking the Status Quo

So why haven’t more companies embraced pricing as a core go-to-market function? The answer lies in inertia and mindset. For decades, pricing has been treated as an extension of other functions—sales, finance, or marketing management. Changing this mindset requires a fundamental shift in how executives think about pricing. It requires recognizing that pricing is not just a number on an invoice; it’s a statement of value, a measure of competitiveness and a reflection of your strategy. This shift is not easy, but it’s essential. It starts with leadership.

CEOs and CFOs must champion pricing as a strategic priority, just as they do with supply chain optimization or digital transformation. They must allocate resources, hire talent and demand accountability. They must ask the tough questions: Who owns pricing? What processes are in place to ensure discipline and consistency? What tools are being used to support decision-making? And most importantly, how are we capturing value in the marketplace?

The Risk of Doing Nothing

The manufacturing industry is at a challenging crossroads. Disruptive forces such as inflation, supply chain volatility, and geo-political conflicts are putting unprecedented pressure on margins. At the same time, customers are becoming more sophisticated, demanding greater transparency and value.

In this environment, companies that fail to invest in pricing will find themselves at a competitive disadvantage. So I’ll ask again: Would you run your company without a supply chain, a procurement, or engineering team? If the answer is no, then it’s time to stop running it without pricing. Pricing deserves the same level of investment, attention, and respect as any other core function. The companies that recognize this will be the ones that thrive in the years to come. Those that don’t will be left behind. The choice is yours.

Written by:  Stephan Liozu, Ph.D., chief value officer at Zilliant, for IndustryWeek.