1% on Price Beats 10% on Volume — Run the Arithmetic
Price is the most leveraged variable on the profit and loss because it arrives with no cost attached. Almost nobody has ever tested what their customers would actually accept.
Cyril BelloirFinancial StrategistThe comparison
Ten million of revenue at a 12% margin gives €1.2M of EBITDA. A 1% price rise adds €100k straight to EBITDA — an 8.3% improvement. A 1% volume rise at a 40% contribution margin adds €40k, or 3.3%. Price is roughly two and a half times the lever.
Run it in reverse and discounting looks worse than it feels. At a 40% gross margin, a 10% discount requires 33% more volume simply to hold gross profit flat. Your reps give that away in a sentence.
The elasticity nobody models
At a 40% gross margin you can lose 20% of your customers on a 10% price rise and still end up flat on gross profit — with materially less cost to serve and more capacity for the accounts that remain.
Nobody runs this calculation before saying "we would lose clients". Structure also beats level: introduce a premium tier and 10–20% typically self-select upward. Move from day-rate or headcount pricing to outcome or usage pricing so revenue tracks the client's value rather than your labour. Offer annual prepay with a real incentive and you take cash now, lock churn for twelve months and remove the collections problem for that cohort.
Why the debate never resolves
Pricing gets argued in meetings and never tested in the market. The bottom decile of your client base is a free laboratory: if you are wrong, you lose your worst revenue.
Refusing to test is not commercial caution. It is discomfort with a conversation.
Take the bottom 10% of accounts by price and raise them 12% at next renewal. Record the acceptance rate. That number ends the debate permanently.
Former CFO of Europe's fastest-growing facility management group, with more than 60 due diligence processes completed.
Meet the team →Questions we get asked
Is raising prices or growing volume more profitable?
Price, by roughly two and a half times. On €10M revenue at a 12% margin, a 1% price rise adds €100k of EBITDA; a 1% volume rise at 40% contribution adds €40k.
What does a 10% discount really cost?
At a 40% gross margin, a 10% discount requires 33% more volume just to hold gross profit flat. Most reps give it away in a sentence without that arithmetic.
How do I test a price increase safely?
Use the bottom decile of accounts by price as a laboratory. Raise 12% at next renewal and record acceptance. If you are wrong, you lose your least profitable revenue.
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