Case Study: Drive Revenue With Strategic Pricing

This case highlights that pricing adjustments do not always need to be approached as price increases. By implementing a strategic, data-driven approach that considers market dynamics, customer expectations, brand positioning, and operational efficiencies, companies can drive substantial revenue and profitability gains while preserving customer loyalty and achieving pricing coherence. In this instance, a targeted, thoughtful pricing reorganisation led by KABEN Partners delivered a 23% increase in EBITDA without alienating customers, even in an environment where prices are highly visible.

Situation

Following the acquisition of a specialised services group in beauty and haircare with over 350 stores spanning four distinct brands, a private equity (PE) fund identified a clear opportunity to improve revenue by increasing in-store prices. Given recent sales declines at specific locations and inflationary pressures affecting raw material and labour costs, the PE fund aimed to improve financial performance through a pricing overhaul. However, several challenges emerged:

• Competitive Pressure: The group’s competitors, typically independently owned and operating with leaner cost structures, and the organisation could adjust prices quickly and often. The client’s organisational structure imposed less frequent and more significant changes.
• High Price Visibility: Customers were frequent visitors to these stores—on average every 45 days—and were highly familiar with price points. Any price fluctuations would be quickly noticed, potentially impacting customer perception and loyalty [1].
• Inconsistent Pricing Across Locations Due to historical pricing autonomy, stores exhibited significant price variations, with many retaining legacy prices from previous ownership. For a single product, prices could vary across as many as 23 different levels for the same brand, making pricing coherence and consistency nearly impossible.

Challenge

The core challenge was to standardise and optimise pricing across more than 350 stores in a way that enhanced profitability without deterring customers or compromising competitiveness. Additionally, the existing fragmented pricing structures and decentralised autonomy had led to inefficiencies and an inconsistent customer experience across the store network. This project also aimed to establish a unified, group-wide data-backed pricing policy and methodology that reinforced the distinct brand identities of the four brands through price positioning and aligned communication strategies.

Action Plan

To create a pricing structure that balanced competitiveness, customer retention, and profitability, we designed and implemented a comprehensive pricing reorganisation:

1. Cluster Stores and Set Tiered Pricing: We segmented stores into clusters based on objective criteria such as location, customer demographics, frequentation levels, and local market conditions. Within these clusters, we established five standardised price levels to ensure competitive pricing aligned with local market realities.
2. Standardise Price List Structure: By aligning pricing structures across stores, we created consistency. For instance, Service A was standardised to be 15% higher than Service B across all locations, bringing uniformity to the service hierarchy and reinforcing a coherent pricing logic chain-wide.
3. Introduce Bundles and Subscription Options: To boost customer retention encouraging customers to trade off discounts with loyalty and increase average transaction value, we introduced new products and services bundles and subscription options tailored to each brand.
4. Involve Regional Leadership in Price Setting: We engaged regional managers early in the process to ensure their buy-in and secure local insights for the pricing strategy. By involving them and their teams directly in setting new prices within their respective regions, we fostered a sense of ownership and alignment. This approach empowered regional managers to advocate effectively for the new pricing approach with their staff, ensuring field-level support and consistent execution across stores.
5. Eliminate Anomalous Prices: Outlier prices that deviated from the regional or cluster averages were removed, reducing customer confusion and reinforcing competitive pricing. This approach ensured that each price point aligned with the store cluster’s market positioning.
6. Track Sales Ratios to Identify Weaknesses: We established mechanisms to monitor sales ratios among key products and services, identifying offerings that were either uncompetitive or generating revenue leakage, thus providing actionable insights for continuous improvement.
7. Reinforce Brand Positioning: Each brand within the chain was given a distinct pricing identity. For example, the budget brand was consistently priced 20% below the mid-range brand for comparable services within the same area/cluster, clearly communicating the positioning of each brand tier.
8. Revise Promotion and Discount Strategy: To protect margins, we implemented stricter controls over promotions and discounts reducing the likelihood of abuse and ensuring that peak traffic translated into revenue.
9. Upgrade IT Pricing System: We overhauled the IT system to streamline pricing implementation across stores. This upgrade minimized errors, enhanced compliance, and ensured that pricing changes were applied uniformly and effectively across all locations.

Results

The optimised pricing strategy delivered substantial financial benefits while preserving customer satisfaction and foot traffic:

• 16% Average ticket price increase (including cross-selling & Bundling)
• €5.6 Million in Additional Revenue. The price increase Y2 generated 1.5M€
• +12% Revenue Increase
• +23% of EBITDA Growth directly attributed to the pricing update (60% of Y1 EBITDA Growth)

By framing these adjustments as a “pricing reorganisation” rather than a conventional price increase, the chain achieved significant revenue and profitability gains without disrupting customer loyalty or visitation frequency. This strategic realignment created a pricing framework that now enables the chain to operate more efficiently, cohesively, and profitably across all locations.

[1] Sales’ justifications for resistance to price increases have remained consistent over time. In 1939, Hall and Hitch reported that sellers stated a “conventional price is in the minds of buyers” and that “price changes are disliked by buyers.” Decades later, Blinder et al. (1998) similarly found that many respondents believed price changes could “antagonise” or “cause difficulties” with customers.