How to maximize revenue and profit Finding the optimal price for profit and /or revenue is the holy grail for most businesses. But it’s far less straightforward than it seems. Let’s break it down. Revenue is (relatively) simple We know the basics: If a product is inelastic (e > -1), increasing the price increases revenue If it’s elastic (e < -1), increasing the price decreases revenue So, in theory, if you know elasticity, you can estimate the price change that maximizes revenue. And in fact,...

Most Companies Track Price. Very Few Track Pricing Performance. Most companies know their: List price Discounts Margins But very few companies track pricing performance . Pricing performance answers a different question: How effectively does pricing drive revenue, profit, and market outcomes? To answer that question, companies need a system of pricing metrics , not just a few isolated KPIs. Below is a simple framework for thinking about pricing metrics. Price Level Metrics These metrics...

They collapse quietly, and long before you notice! 😲 Many industries are under serious margin pressure. The reasons are familiar: ⚠️ Intense competition ⚠️ Price pressure ⚠️ Limited customer budgets ⚠️ Rising energy and raw-material costs ⚠️ Macro uncertainty Even highly differentiated markets like AI are feeling it. For example, in a recent post, Gary Bailey  highlighted that OpenAI may be operating at margins as low as -70%. So here’s the real question: 👉 How easy is it to “just” raise...