In 58 editions, I have never written about pricing. That is not an oversight. It is a symptom of the exact problem I want to talk about today.
Pricing consistently ranks in the top three value-creation levers in PE portfolios, according to McKinsey, Bain, and Simon-Kucher. The math is not subtle: a one percent improvement in price yields six to ten times the profit impact of a one percent improvement in volume, depending on the business model. Yet in well over half the portcos I have worked with, pricing falls into a gap between product, finance, and marketing. Nobody owns it. And that gap is costing portfolios more than almost any other GTM failure.
Most portcos cannot tell you whether their current packaging reflects their actual ICP. Most are heading into their next board review, or their exit process, without a defensible answer to the question a buyer will absolutely ask: does this company have pricing power?
Here is how to close the gap.
Why Portcos Do Not Reprice
The most common reason I hear is that nobody wants to upset existing customers. The second most common is that sales thinks a price increase will cost deals. Both concerns are real and both are manageable. What is not manageable is entering a sale or exit process with pricing that was set three years ago, before your product matured, before your ICP sharpened, and before your competitive position changed.
If your net revenue retention is below 100%, your existing customer base is actually shrinking — churn and contraction are outpacing whatever expansion you are generating. Below 105% is an early warning sign worth taking seriously. Either way, before you invest another dollar in pipeline generation, examine whether your pricing and packaging architecture is creating the friction. Expansion revenue does not happen organically when customers cannot see a clear, compelling path from one tier to the next. And customers who feel the price they paid does not match the value they are getting will not renew at full rate, let alone grow.
Packaging as an ICP Amplifier, and the 80/20 Problem
Packaging is not just about feature tiers. It is a signal to the market about who you are built for. When your packaging is misaligned with your ICP, you attract the wrong buyers, close the wrong deals, and spend the next 12 months fighting churn you did not see coming.
The best packaging work I have seen starts with a simple question: what do your best customers actually use, and what are they not using? That utilization gap is your packaging problem. And it often points to something deeper: product overdesign. When product management and engineering have built features that no customers are actively using, that is not just a packaging problem. It is a wasted R&D investment. The 80/20 rule applies here as much as anywhere else in your GTM. Eighty percent of your customer value is typically coming from twenty percent of your feature set. If you do not know which twenty percent, you are guessing at both packaging and pricing.
Customers who are not activating key features are either poorly onboarded or in the wrong tier. Both are fixable, but you have to look at the utilization data through a commercial lens.
Packaging redesign, done well, is one of the fastest ways to increase ACV (average contract value) without increasing the cost of sale. When buyers land in the right tier from day one, you reduce discount pressure, improve onboarding success, and create a natural expansion path.
The Annual Pricing Review Your CFO Will Thank You For
Every portco should run a formal pricing review once a year. It does not need to be a six-month engagement. A well-run review takes four to six weeks and covers six things: competitive benchmarking, win/loss analysis by deal size and segment, discount pattern review, packaging utilization data, gross revenue retention, and net revenue retention. The retention metrics are not optional. Win/loss tells you what happened at the front of the funnel. GRR and NRR tell you what happened downstream, after the signature. Together they give you a complete commercial picture that neither your sales team nor your finance team is likely looking at end-to-end.
Your CFO will value this exercise because it surfaces pricing leakage that never shows up in the income statement until it is too late. Your sales leaders, once they see the data, usually find that their instinct to hold price is justified by the numbers. And your board gets a defensible answer to the question they will eventually ask: have you pressure-tested your pricing model?
Schedule it in Q4, tie it to your annual planning cycle, and own it. Someone has to.
Land-and-Expand Requires a Pricing Architecture, Not Just a Sales Motion
Land-and-expand is a strategy that lives or dies by how pricing is designed, not by how hard your CSMs push. The landing price has to remove friction without signaling commodity. The expansion path has to be visible enough that customers can see it coming and attractive enough that they want to walk it.
The most common mistake I see: expansion pricing gets invented deal by deal, in response to negotiation pressure, rather than built into the architecture from the start. If your CSMs are creating creative pricing structures at every quarterly business review, your pricing architecture is not working. Expansion revenue should feel like a natural next step, not a negotiation.
How Pricing Shows Up in Exit Diligence
If you are 18 to 24 months from a liquidity event, pricing is one of the first things a sophisticated buyer’s diligence team will examine. They will look at your pricing history, your discount rates by segment, your NRR by cohort, and your ACV trends over time. What they are really trying to determine is whether this company has pricing power, or whether it has been giving it away to close deals.
Companies that have run formal pricing reviews, documented their methodology, and can show disciplined discount governance come into diligence in a materially different position. It is not only about the multiple. It is about the narrative: we know what we are worth, we price accordingly, and our retention data proves our customers agree.
The CMO’s Role vs. Product’s Role
This is where most portcos get stuck. Product owns feature decisions. Finance owns revenue targets. Marketing owns messaging. Pricing falls through the cracks.
The CMO’s job is not to own pricing unilaterally. It is to make sure someone does, and to bring the right inputs to the table. In my experience, the most effective portcos either build a dedicated pricing function inside revenue operations or establish a cross-functional pricing committee with a clear chair and a defined cadence.
I have been in this seat. At Xerox, Panasonic, AT&T Capital, and other companies, even as CMO I had comprehensive input into pricing strategy and implementation. The model that worked consistently was a close partnership with the CFO. Finance brings the margin and retention data. Marketing brings the ICP, positioning, and competitive intelligence. Together you can build a pricing model that the entire go-to-market team will actually execute, because it carries both commercial and financial credibility.
This is not a new idea. Chris Burggraeve, former CMO of AB InBev and author of “Marketing is Finance is Business,” has been making this case for years: that the CMO and CFO must co-create pricing strategy together to build sustainable pricing power, and that marketing leaders who cannot connect their work to financial outcomes will always be on the losing side of that conversation. If you have not read it, you should.
Your specific contribution as CMO is threefold. You own the ICP definition that anchors packaging design. You own the market positioning that justifies premium pricing. And you own the feedback loop from marketing and funnel data that tells you when pricing is creating friction in the buying process. If deals are stalling late at an unusual rate, pricing is often the reason. If your best-fit prospects are converting below expectations, packaging misalignment is often the cause. The data is there. You have to look at it through a pricing lens.
The Bottom Line
Pricing is not a finance function. It is not a product function. And it is not a decision you made three years ago and can leave alone. It is a living part of your GTM system, and it deserves the same rigor you bring to demand generation, pipeline management, and customer success.
If you have not revisited your pricing in 24 months, start with one question: does our current pricing still reflect the value we deliver, the customers we want to serve, and the market position we want to hold?
The answer will tell you everything.
