Why a 3% price increase beats every other lever


In business, we spend endless hours discussing how to cut costs, increase sales, or drive operational efficiencies. Yet one lever is consistently more effective, more immediate, and more overlooked: the strategic price increase.

This is article 4 in our series Pricing Insights, where we explore high-impact, low-friction ways to grow profit through pricing.

Let’s do the math

Imagine a company with €100 million in revenue and a 10% EBITDA margin. That’s €10 million in operating profit.

Now, apply a 3% price increase across the customer base, assuming volume holds steady:

  • Revenue increases from €100M to €103M.

  • Most of the additional €3M is pure margin.

  • EBITDA goes from €10M to €13M – a 30% profit increase.

That’s not theory – it’s math.

To achieve the same €3M uplift by increasing sales at 10% margin, you’d need €30 million in new revenue. That could take years, demand major investment, and carry risk. A price increase, on the other hand, takes weeks to implement.

Comparison: other profit levers vs. pricing

Lever                                    Assumed effect                            Complexity                               Time to impact

Sales growth                      Requires major volume               High                                              Long

Cost-cutting                       Often one-off, morale impact    Medium-High                             Medium

Supplier renegotiation    Limited upside                               Medium                                        Medium

Hiring freeze                      Risks capability                              Medium                                       Medium

Pricing improvement       High leverage, recurring              Low                                               Short

Price is the most sensitive and direct driver of profitability. A 1% improvement in price typically results in a 5–12% improvement in profit, depending on industry.

Why it works so well

  • Leverages existing customer base.

  • Does not require new spend or headcount.

  • Reinforces brand value.

  • Compounds over time.

Most importantly: customers expect it when value, cost, and positioning justify it. And yet, many companies postpone price action due to internal fear.

The psychological barrier: fear of churn

Business leaders often imagine worst-case scenarios: “What if we lose the customer?” But the reality is:

  • If you raise prices thoughtfully and communicate clearly, 80–95% of customers accept the change.

  • Pushback can be managed with preparation and empathy.

  • Churn risk is highest when price hikes are unannounced, unexplained, or inconsistent.

A weak price signal creates suspicion. A confident, transparent price increase reinforces trust.

Real-world example

A Nordic SaaS provider increased prices across its mid-market client base by 4% while adding no new functionality. They focused on contract value, service quality, and market benchmarking.

Result:

  • Retention held steady at 97%.

  • Net revenue retention improved.

  • Gross margin lifted by 2.5 percentage points.

  • Valuation multiple expanded due to improved metrics.

Why sales leaders should love this

  • Easier to hit budget with same volume.

  • Less pressure on upselling or chasing low-fit leads.

  • Reinforces premium positioning in competitive markets.

With the right tools and messaging, pricing becomes a commercial accelerator – not an obstacle.

For CFOs and CEOs: the valuation effect

If your business is valued at a 10x EBITDA multiple, then:

  • A €3M increase in EBITDA = €30M in added valuation.

  • That’s 3% more price, 30% more profit, 30% more value.

And the best part? It’s repeatable. You can run annual reviews, benchmark pricing, harmonize portfolios, and sustain that impact year after year.

Don’t wait for the perfect moment

Waiting for the market to calm down or for inflation to stabilize is a missed opportunity. Pricing is a strategic function, not a reactive adjustment.

You don’t need to increase everything at once. Start here:

  • Harmonize segments so similar customers pay similar prices.

  • Remove legacy underpriced contracts.

  • Index prices annually based on cost and wage inflation.

  • Build pricing review into your business planning cycle.

Start where your value is highest

If you’re afraid to start across the board, pick the top 20% of accounts where:

  • You have strong retention.

  • You deliver high ROI.

  • The competitive landscape supports it.

Lead with strength, not apology.

Final word: the most effective growth strategy you’re not using

You’ve already invested in products, teams, infrastructure, and service. A well-managed price increase is a way to capture the fair value of that investment.

Forget gimmicks. A 3% price increase, applied with logic, consistency, and confidence, is arguably the most effective growth strategy available to any B2B company. No other lever gives you this level of immediate, scalable, and recurring profit impact with such low execution risk.

Author: "Mr Pricing", Tobias Murray, CEO and Co-founder at VAERG vaerg.com 

About the author. Tobias Murray helps B2B companies turn pricing into a scalable growth engine. With long-standing experience across industries, he specializes in structured, data-driven pricing strategies that consistently deliver 10–25% EBITDA uplift. As CEO of VAERG, he and his team transform fragmented pricing into a systematic, value-generating discipline.