Verizon makes a rare and honest admission. The company says its pricing strategy has driven customers away. New CEO Dan Schulman openly links rising churn to repeated price increases that did not deliver matching value. Over three years, churn rises by 0.25 percentage points. That may seem small, but it equals roughly 2.25 million fewer net customers. This is a stark reminder of how to justify price increase decisions, and what happens when they are not clearly tied to value.
If we strip back the numbers, the message is simple. Customers tolerate price rises only when they see real value. When they do not, they walk. Verizon’s case is not unique. Across the customer churn in telecom industry, and in many other service and subscription markets, a weak price increase strategy quickly turns into costly pricing mistakes. Research shows that when pricing aligns with customer-perceived value, churn can fall significantly. Paying attention to this is not optional. It’s vital.
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Verizon’s Mistakes on How to Justify Price Increase Decisions
It is unusual for a big company to blame its own pricing strategy. Usually, leaders defend their pricing decisions. But Verizon’s admission highlights a broader issue about how to justify price increase decisions. Pricing is not just a lever for short-term revenue. It is a strategic capability that shapes loyalty, retention and long-term growth.
In Verizon’s case, the company implemented several price increases across plans and fees, without clearly explaining or linking them to added value. Customers reacted predictably. They left. The result was a sharp rise in customer churn. This reminds businesses that every price increase strategy must be anchored to value. Otherwise, it becomes one of the most costly pricing mistakes a business can make.
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Increased Verizon Prices and Customer Churn in the Telecom Industry
Verizon’s churn increase of 0.25 percentage points may look modest at first glance. Yet every small rise in churn matters. For large subscription businesses, even a 0.01 point increase can mean tens of thousands of lost customers. Verizon’s own figures show this. It translates into about 2.25 million fewer net additions over three years, highlighting the real cost of failing how to justify price increase decisions.
This matters, not just for revenue, but for brand strength and future growth. Lost customers reduce market share. They also weaken a company’s competitive position. In highly competitive sectors like telecoms, rivals like AT&T and T-Mobile have been growing while Verizon loses ground. Customers are comparing more than price. They are comparing perceived value, quality of service, and overall experience. When pricing ignores this, churn accelerates.
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Why Customers Punish “Empty” Price Increases
Customers do not revolt against price increases per se. They react when increases feel unjustified. This is the core challenge of how to justify price increase decisions. Customers judge price through the lens of perceived value. If they do not see a corresponding gain, they feel short-changed. Then they switch. Pricing research shows that aligning price with value reduces churn and improves loyalty, helping avoid common pricing mistakes.
When customers feel they get fair value, they stick. If not, they look elsewhere. That simple dynamic holds across industries. And it is crucial for pricing teams to understand. Pricing is not a cost allocation exercise. It is a value communication exercise.
Verizon Learns Its Lesson from Pricing Strategy Mistakes
In response, Schulman signals a reset. He rules out “empty price increases” as a growth strategy and reframes how to justify price increase decisions around clear customer value. Price rises are still possible, but only when they are earned. Verizon expects flat wireless revenue this year as it laps past changes in Verizon prices. That may look weak in the short term. But the company now targets up to one million new postpaid customers. This is a deliberate price increase strategy. Prioritise retention and share first. Then grow.
This shift matters. It shows a clear choice to put customer value ahead of quarterly revenue boosts. That is the essence of sustainable pricing and how businesses avoid repeat pricing mistakes.
How to Justify Price Increase The Right Way
Execution now becomes the real test. Pricing trust does not return quickly once broken, especially when how to justify price increase decisions are unclear. Customers remember unjustified rises. Rebuilding confidence requires consistency, restraint, and proof of value in every price move. Teams must track how pricing affects behaviour, particularly where customer churn in the telecom industry remains high. This calls for stronger pricing governance, clearer value articulation, and tighter cross-functional alignment.
In many organisations, pricing decisions are fragmented. Marketing sets discounts. Sales negotiates custom offers. Finance approves cost-plus mark-ups. This fractured approach leads to pricing mistakes and weakens any coherent price increase strategy. Verizon’s experience shows why a unified, value-based pricing capability is essential.
What Pricing Teams Should Do Differently
For pricing teams, the task is urgent and practical. Start by getting clear on what customers genuinely value and how to justify price increase decisions with evidence. Use data, customer interviews, and willingness-to-pay analysis to define value drivers. Then, tie prices directly to those drivers. This avoids costly pricing mistakes and works. Firms that align prices to perceived value improve loyalty and growth.
Keep reviewing pricing decisions as value shifts. Markets evolve. Competitor offers change. Customer needs change. A strong price increase strategy adapts with them. Build dashboards that track churn, perceived value, and customer feedback. Make pricing a continuous conversation, not a once-a-year event.
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What Business Leaders Must Learn From Verizon
For business leaders, the lesson is blunt. Price increases without value destroy demand faster than they grow revenue. This is the risk of failing how to justify price increase decisions. Poor pricing weakens loyalty and damages the brand. Leaders must back pricing teams with the right resources and a value-centric mindset. That includes investing in research, analytics, and cross-disciplinary collaboration to avoid repeat pricing mistakes.
Some leaders still see pricing as a financial lever only. That is a mistake. Pricing is strategic. It shapes customer relationships, market positioning, and long-term growth, especially when a price increase strategy is used to drive sustainable value rather than short-term revenue.
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How to Build a More Sustainable Price Increase Strategy
Poor pricing does more than erode revenue. It drives away customers, weakens trust, and limits future growth. Verizon’s rare admission is a clear wake-up call on how to justify price increase decisions. Executives must rethink how pricing choices are made and rewarded. Make pricing a boardroom priority, not just a spreadsheet exercise. Pricing teams, in turn, should lead value-based conversations across the business to avoid costly pricing mistakes. Every price move must link to clear customer value and adapt as that value changes.
Price with purpose. Price with value. That is how sustainable growth is built. Let’s talk about what your customers truly value and how your organisation supports pricing today. Reach out for a practical, honest discussion about your pricing and organisational challenges. Together, we can turn pricing from a risk into a strength.
For a comprehensive view on how to prevent revenue loss in your company, download a complimentary whitepaper on How to Avoid Pricing Chaos.
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