Introductory
The standard functions as a practical rule which prevents businesses from using “+X%” pricing models while allowing them to implement value-based pricing adjustments. Accept (N) or (A–B). The assessment includes tests and math sections as well as corridors and KSA/GCC guardrails.
Accept: (N) or (A–B)
Why this exists
The statement “Let’s add 10% this quarter” seems powerful at first but it usually results in lost credibility and decreased volume and permanent damage to profit margins. The concept of ambition functions independently from pricing strategy because business decisions stem from value and demand signals and competitive market conditions. The policy in Unrealistic Pricing Ambitions defines price changes as requiring data support and operational feasibility and legal compliance. The post-inflation market creates difficulties because customers have different price sensitivity levels while competitors quickly adjust their prices and customers remember previous instances of receiving poor value for their money. Our standard demands that companies stay away from slide-deck pricing methods while they conduct systematic test-and-learn approaches for all KSA/GCC market operations.
Scope
Applies to all list prices, fees, surcharges, discount ladders, and deal policies across enterprise, distributor, and retail channels in KSA/GCC. The plan introduces new product pricing which will be applied to all current stock-keeping units (SKUs).
Acceptance criteria (pick one)
- N — Not acceptable: Ambition-led proposal (e.g., “target +12%”) with no quantified value, elasticity, or corridor, or no executable rollout plan.
- A–B — Acceptable (with conditions): The proposal contains evidence-based data that includes EVC quantification and elasticity assessment and competitive corridor definition and complete unit economics calculations and execution strategy with performance monitoring systems.
The five tests (must pass for A–B)
- Value evidence (EVC) shows the financial outcomes of an investment compared to alternative uses of the same funds. Proposed price ≤ EVC by segment.
- Elasticity signal: Provide a defensible elasticity (tests, win/loss, mix-shift, or small-scale pilots). Price-volume trade-off must net positive at Base / −3pp / −5pp volume scenarios. https://3msbusiness.cloud/ignoring-price-elasticity-pnl-leaks/
- Businesses must create documented offer corridors or demonstrate premium value through measurable differentiators to achieve competitive sanity. Note expected countermoves and any KSA/GCC competition-law considerations. https://3msbusiness.cloud/pricing-architecture/
- Cost & contribution math: Use realized price after rebates/discounts. Show how contribution margin changes and breakeven volume shifts and cash flow effects throughout each month. https://3msbusiness.cloud/the-price-waterfall-where-margin-quietly-disappears/
- The execution capacity needs to validate all quote-tool rules and deal-desk guardrails and sales playcards and customer communications and monitoring systems. Anything missing = N.
Automatic N red flags
- Round-number hikes (+5%, +10%, etc.) with no EVC or elasticity.
The price was determined by working backward from the revenue targets.
The implementation of one-size-fits-all price increases results in equal price changes for all market segments and all product SKUs.
The company will resolve discount problems while keeping the present share price system in place.
The research fails to examine how KSA/GCC market conduct functions through legal systems that use signaling and corridor coordination and below-cost foreclosure methods.
The math (what you must show)
- Elasticity profit check:
Q1=Q0⋅(1+ϵ⋅ΔPP0),ΔProfit=(P1−C)Q1−(P0−C)Q0Q_1 = Q_0 \cdot \left(1 + \epsilon \cdot \frac{\Delta P}{P_0}\right), \quad \Delta \text{Profit} = (P_1 – C)Q_1 – (P_0 – C)Q_0
Approve only if ΔProfit>0\Delta \text{Profit} > 0 in Base and remains ≥0 in −3pp and −5pp volume stress.
- EVC guardrail:
EVC=PriceNBA+(Savings+Revenue Uplift−Switching Cost)\text{EVC} = \text{Price}_{\text{NBA}} + (\text{Savings} + \text{Revenue Uplift} – \text{Switching Cost})
The proposed price should remain under the EVC threshold which applies to this market segment.
- Corridor logic:
The system will display differentiators for each product when P1P_1 exceeds the corridor value but it will explain the reasoning behind the discount strategy when P1P_1 falls below the corridor value by showing penetration and lifetime value calculations and setting rules to limit discount exposure.
Operating procedure
- Create the INTERNAL—Pricing Brief document by adding the EVC and elasticity and corridor and waterfall exhibits to it.
- Review board: Pricing + Finance + Legal (GAC lens for KSA). The document contains three main sections which analyze risks and outline customer communication strategies and predict how competitors will react.
- The first step involves testing the new design through A/B testing or regional deployment with specific success criteria to determine if it should proceed to full implementation.
- Instrument tracking: Weekly: price realization, mix, win rate, churn, competitor moves.
- The project needs to restart from the beginning according to the kill/iterate rules when realization falls under 70% after four weeks or when the gross margin difference becomes less than 0.5 percentage points.
What “good” looks like (A–B example)
The EVC presents SAR 1,400 per year in customer savings compared to other options yet the proposed +6% (SAR +18/month) only captures less than 15% of the total value.
- Elasticity: −0.8 from recent discount test. Base volume −4%, profit +SAR 1.1m; stress at −7% volume still +SAR 0.3m.
The competition provides SAR 110–130 pricing but our company charges 124 SAR with uptime and SLA as separate paid features.
The system functions through three main features which include active sales playcards that operate within quote rules and communication approval systems and weekly realization and churn data display on the dashboard.
Common pitfalls (and counters)
The initial revenue goals of a project transform into price targets during its execution which leads to ambition creep. The system requires a mechanism to block proposals which fail to meet the five fundamental requirements.
- Copy-paste uplifts: The same percentage increase applies to all SKUs. The counter strategy involves dividing products into segments based on their value and elasticity levels to protect high-value SKUs and develop different solutions for underperforming products.
The approach of focusing only on costs does not establish pricing authority. The counterargument focuses on the willingness to pay and alternative options.
- Legal blind spots: Aggressive moves without GAC review. Legal needs to review all high-risk plays before the game to stop coordination problems and the team must explain their thought process behind these choices.
The sales team receives the “+8%” message but they end up giving away too many discounts. Counter: Tools contain guardrails which include approvals and measured realization and tools with guardrails.
Decision tree (quick use)
- Ambition-led with no evidence → N
- Evidence-led and all five tests pass → A–B
- Uncertain → Pilot for 2–4 weeks with instrumentation, then decide.
External reading (≤5 years; includes GCC/KSA)
The McKinsey website delivers information about pricing approaches for 2024 disinflationary times through their article “How to navigate pricing during disinflationary times (2024).” (McKinsey & Company)
BCG — Solving the Pricing Puzzle in Inflationary Times (2023): https://www.bcg.com/publications/2023/solving-the-pricing-puzzle-in-inflationary-times (BCG)
Global Competition Review — Saudi Arabia levies rare predatory pricing fine (2023): https://globalcompetitionreview.com/article/saudi-arabia-levies-rare-predatory-pricing-fine
(Global Competition Review)
Strategy& Middle East — GCC insights (2025): https://www.strategyand.pwc.com/m1/en/thought-leadership-strategy/reports.html(PwC)
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