Hexagon’s Pricing Neglect Hurts Profitability

Hexagon’s Chief Financial Officer Enrique Patrickson says enterprises often ignore pricing as a lever for profitability, despite its direct link to the bottom line. Many organizations struggle to measure the impact of pricing decisions on financial performance, leading to a fragmented approach where responsibility falls between commercial, operational, and finance teams.

Fragmented ownership obscures revenue drivers

When pricing duties are split across different departments, businesses lose the ability to isolate exact revenue drivers. This lack of clear ownership means leadership cannot discern whether growth comes from increased sales volume, an updated product mix, or actual price increases.

“Pricing sits across finance, commercial and operational teams, so responsibility can become fragmented,” Enrique explains. Without this clear attribution, executives cannot accurately assess the true quality of their profit margins. Enrique argues that this dynamic must shift at the executive level.

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“In my experience, pricing needs to be treated as part of financial performance management, with the same scrutiny as other major drivers of profitability,” he notes.

The gap between strategy and execution

Macroeconomic instability and supply chain disruptions place immense pressure on corporate profit margins. When external factors like tariffs or foreign exchange movements arise, businesses without robust pricing visibility risk making reactive decisions. Enrique warns that allowing these effects to disappear into one unexplained variance is dangerous. He adds that applying a blanket price increase across a portfolio can render unaffected products less competitive.

The disparity between corporate pricing strategy and on-the-ground commercial execution is another major source of margin erosion. Enrique points to discounting as an obvious example. Sales teams often utilize heavy discounting to secure deals, which, in theory sounds good, but actually undermines the intended corporate strategy. “If leadership only sees the headline revenue number, the underlying problem can remain hidden,” he adds.

“Setting a pricing strategy is only half the job,” he emphasises. “The real test is what happens when that strategy meets individual commercial decisions.”

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Beyond the operational mechanics, the structural disconnect between what a company intends to charge and what customers actually pay creates a persistent blind spot. Even when a strategy is formally approved, the reality of day-to-day negotiations often diverges significantly from the plan. This gap means that the theoretical value of a product is constantly at odds with the realized revenue, making it difficult for finance teams to reconcile their forecasts with actual performance.

Advice for Chief Financial Officers

To understand whether pricing is driving performance, Enrique explains that the best starting point is a structured approach to data. He notes that many organizations still cannot understand the individual effects of price and volume while also accounting for changes in product or channel mix.

“Revenue can rise because you sold more or achieved a better price, while changes in what customers buy can alter the picture further,” Enrique says. “Also, if you managed to raise prices on subscription revenue, then this is another incremental impact.”

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Each tells a different story about the quality of growth and may require a different management response. Great transparency requires that you can distinguish between price realisation and margin leakage.

In practice, Enrique suggests a structured visibility model for price-volume-mix-cost as a standard to understand the quality of enterprise growth and margin development. “CFOs love that,” he adds.

To ensure greater visibility into pricing, CFOs should also create greater accountability. While pricing performance is often a regular part of management discussion, Enrique says more can be done. He suggests forming a dedicated pricing council that brings together leaders from product, marketing, sales and finance to review strategies. Empowering the pricing council with a clear mandate to make definitive pricing decisions and review the real-world impact of approved discounts can translate to actions.

• Understand the individual effects of price and volume while accounting for fluctuations in product or channel mixes
• Distinguish clearly between price realisation and margin leakage to identify weaknesses in discount governance
• Implement a structured visibility model for price-volume-mix-cost to establish a baseline for measuring growth quality
• Form a dedicated pricing council that brings together leaders from product, marketing, sales and finance to review strategies
• Empower the pricing council with a clear mandate to make definitive pricing decisions and review the real-world impact of approved discounts