In most mid-sized businesses, pricing lives in finance. It’s built into spreadsheets alongside costs, overheads, and margin targets. It gets reviewed at budget time. It’s expressed as a number that satisfies the P&L.

This is a mistake that compounds quietly for years.

The problem with finance owning pricing

Finance’s job — and it’s an important one — is to ensure the business doesn’t run out of money. That means watching costs, protecting margins, and maintaining the financial ratios that keep banks and investors comfortable.

This is fundamentally backward-looking. It answers the question: given what we’ve already spent, what do we need to charge?

Pricing strategy asks a different question: given what customers value and what the market will bear, what should we charge — and how should we structure it?

These questions have different answers. Often very different.

Pricing is a commercial and strategic function

The insight that unlocks pricing is almost never found in a cost sheet. It’s found in understanding:

  • Why customers buy
  • What alternatives they’re comparing you to
  • Which customers capture the most value from what you do
  • Where your offering sits in their hierarchy of priorities
  • What friction exists in the buying decision

This is the domain of commercial teams — sales, marketing, product, leadership. People who are in regular contact with customers. People who understand the competitive landscape. People who can read the qualitative signals that don’t appear in a spreadsheet.

Finance should inform pricing — specifically around cost floors and margin impact. Finance should never set it.

The organisational symptom to watch for

If your pricing conversations start with “what does it cost us to deliver this?” rather than “what is this worth to the customer?” — finance owns your pricing, whether or not that’s the org chart.

You’ll also often see it in the cadence: if pricing only comes up at budget time or when margins are squeezed, it’s being treated as a cost-recovery mechanism, not a strategic lever.

Pricing needs a home

Someone in your business should own pricing as a strategic discipline. Not a spreadsheet. Not a formula. A person — or a small team — whose explicit job is to understand value, monitor competitive positioning, test price points, and develop a coherent pricing architecture across your product or service range.

In smaller businesses, this is often the founder or CEO by default. That’s fine — but it means being intentional about carving out the thinking time, resisting the urge to delegate the decision to a formula, and treating pricing as something that needs to evolve as the market does.

The upside of getting this right

Businesses that treat pricing as a strategic function — separate from cost recovery — consistently outperform those that don’t. Not marginally. Significantly.

A 1% improvement in pricing realisation is worth three to four times as much to the bottom line as a 1% reduction in costs. Most businesses pursue the cost reduction with rigour and leave the pricing improvement entirely to chance.

Fix where pricing lives in your organisation, and you’ll fix a lot of other things with it.