Pricing shows customers what something’s worth. But it also signals how much you value the people behind it—your staff, suppliers, contractors, and partners. Without a strategic value chain management, it’s easy to overlook the impact on those delivering the value. We once worked with a local business that raised prices to cover rising costs. Sales stayed steady, but staff turnover skyrocketed. Why? The team didn’t see the benefit. They were working harder, for the same pay, while the company was banking higher margins.

 

That’s the problem when a pricing strategy focuses too much on profit and not enough on shared value. It becomes profit-oriented pricing without long-term thinking. Uber’s recent experience is a warning worth listening to. It shows what happens when pricing and profitability management is disconnected from the rest of the business. And it’s where strong value chain management—and a proper value chain audit—comes in.

 

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How Value Chain Management Shapes Pricing and Profitability

 

A value chain includes every step it takes to deliver your product or service—from design to delivery to aftercare. Michael Porter breaks it into two parts: primary activities like operations, logistics, and sales, and support activities like HR, procurement, and tech. Each step adds value—and pricing touches them all. That’s why good value chain management is essential.

 

Look at Uber. Fares went up. But drivers earn less and wait longer. That’s not just a pricing glitch—it’s a breakdown in the chain. When pricing isn’t aligned with how value is created, trust erodes. It’s a sign of poor strategic value chain management, where value chain pricing benefits the platform, but short-changes everyone else. And when that happens, pressure builds—on staff, partners, and even customers.

 

Capability Building Programmes For Pricing & Sales Teams!

 

When Profit-Oriented Pricing Backfires

 

Businesses often price based on market demand, cost, or margin goals. But they rarely stop to ask: who benefits from this price—and who doesn’t? A value chain audit shines a light on that.

 

Let’s break it down:

 

  • If you raise prices, does your staff benefit?
  • If you discount heavily, do your suppliers still make a profit?
  • If your partners carry more of the workload, do they see more of the return?

 

Without visibility, pricing becomes extractive. Uber, for example, increased its average rider fare to £43.50 per hour. But drivers saw their inflation-adjusted earnings drop from £22.20 to £19.06—and their unpaid wait times increased by 23 minutes a day. Meanwhile, Uber’s cut of each fare climbed from 25% to 29%, and even higher in some cases.

 

This is about long-term risk. When pricing leaves parts of the value chain behind, supply dries up, reputations suffer, and costs eventually rise again through turnover, disruption, or regulation.

 

Building a Pricing Ecosystem 🌍 Podcast Ep. 103!

 

How to Conduct a Strategic Value Chain Management Audit

 

Here’s how to do it, step by step:

 

1. Map the stakeholders. Who contributes to delivering your product or service? Think beyond the customer—include frontline staff, suppliers, partners, and tech providers.

2. Track the flow of value. Look at how money moves through the chain. Who gets paid what? Who bears hidden costs—like wait time, overhead, or risk?

3. Compare the value given vs. the value received. A supplier offering flexibility and fast turnaround may be underpaid. A delivery partner facing fuel hikes may be squeezed too tightly.

4. Look for friction. Are people leaving? Or are partners pulling out? What about customers? Are they losing trust? These are signs pricing isn’t aligned.

5. Ask direct questions. “Do you feel fairly rewarded for your role?” can reveal more than spreadsheets.

 

Value chain management doesn’t need to be complex. But it does need to be honest.

 

 

Profit-Oriented Pricing Without Compromising Value Chain Management

 

Uber isn’t the only case. In retail, we’ve seen suppliers pushed to cut costs while retailers raise prices and marketing budgets. The result? Stock shortages, lower quality, and eventually, customer complaints. That’s what happens when value chain management fails—pricing benefits one part of the business at the expense of others.

 

Then there’s the opposite: Trader Joe’s in the US, a grocer known for limited marketing but strong supply partnerships and loyal staff. They offer private-label goods with high margins, but they reinvest in quality products and a standout customer experience. Their approach to value chain pricing ensures customers get good value, suppliers get scale, and employees stay motivated.

 

The lesson? Pricing that shares value strengthens every link. Pricing that extracts it, breaks them.

 

Pricing Recruitment For Pricing Managers!

 

Strong Pricing Strengthens the Whole Chain

 

It’s easy to optimise pricing for profit. However, sustainable growth comes from aligning pricing with the value chain. That means:

 

  • Rewarding the people who deliver your product
  • Supporting the partners who make it possible
  • Ensuring the customer sees and feels the value

 

If any part of that chain weakens, your business feels it. Not always immediately—but eventually, through higher costs, lower morale, and weaker loyalty.

 

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So ask yourself: Is your pricing model strengthening every link in your value chain—or quietly eroding it? If you’re not sure, it’s time for a value chain management audit.

 

Need help doing one? That’s what we do. We work with businesses like yours to develop pricing and profitability management strategies that balance fairness with sustainable profit. If you’re ready to rethink how value flows through your business, please don’t hesitate to reach out. We’re here to help.

 

For a comprehensive view of building a great pricing team to prevent loss in revenue, Download a complimentary whitepaper on How to Avoid Pricing Chaos.

 

Are you a business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?

If so, please call (+61) 2 9000 1115.

You can also email us at team@taylorwells.com.au if you have any further questions.

Make your pricing world-class!