The Pricing GPS Principle

 How Do You Know When You’ve Been Successful in Pricing?

As a society, we rely on GPS to get us where we’re going. It’s a simple formula: know the destination, and the path reveals itself.

Business flips that formula on its head. The destination isn’t given — you have to define it, refine it, and sometimes rediscover it.

And that’s where things get tricky. Most companies don’t actually know where they are, where they’re trying to go, or what “success” even looks like. If you don’t know your current location and you don’t know your destination, you’re not just off course — you’re lost.

Pricing is no different. You can’t know whether you’re succeeding unless you’ve defined the metrics that tell you where you are and the ones that tell you where you’re headed.

Are your prices where they should be for a company at your stage of growth?
Is your margin where it ought to be?
Is your product mix aligned with the value you want to deliver?
Are you building toward a future where the business can thrive indefinitely — an infinite game rather than a finite one?

Without clear metrics and targets, it’s incredibly difficult to know when you’ve actually succeeded, let alone when to celebrate.

In public companies, this can be a little easier to determine. You can benchmark against standard industry margins. For example, Shopify analytics show that the apparel industry averages a 53% gross margin and a 7% net margin.

So if you’re in that space and sitting at a 45% gross margin, you’ve got work to do.
If you’re at 64%, your job is to maintain and protect that performance.

Growth expectations matter too. If your company operates in Placer County, California — currently growing at 9.1% — and your profit is growing slower than that, you may be falling behind the market you serve.

But ultimately, what I’m getting at is this:
Are you tracking the leading measures you can influence, or are you reacting only to the lagging measures that show up after the fact?

⭐ Leading vs. Lagging Measures: The Real Difference

Think of leading and lagging measures as cause vs. effect, or inputs vs. outcomes. Both matter — but they serve very different purposes.

🔮 Leading Measures (Predictive)

Leading measures tell you what’s likely to happen next.
They are inputs, behaviors, or early signals that precede results.

Characteristics

  • Predictive — they move before the outcome moves
  • Influenceable — teams can act on them quickly
  • Short feedback loops — you see changes fast
  • Harder to choose — they require thought and discipline

Examples

  • Number of qualified leads entering the funnel
  • Sales calls completed
  • Website demo requests
  • Production cycle time
  • Customer engagement with new features
  • Price realization on new quotes (before revenue shows up)

Why they matter

Leading measures are where you steer the ship.
If you want to change the future, you change these.

📉 Lagging Measures (Historical)

Lagging measures tell you what already happened.
They are outcomes, results, or final scores.

Characteristics

  • Retrospective — they move after the drivers move
  • Easy to measure — clean, audited, well‑defined
  • Slow feedback loops — you can’t fix last quarter
  • Impossible to influence directly — you can only influence the inputs

Examples

  • Revenue
  • Profit margin
  • Market share
  • Customer retention
  • Churn
  • EBITDA
  • Win rate (after deals close)

Why they matter

Lagging measures tell you whether your strategy worked.
They’re the scoreboard — but not the steering wheel.

🧩 How They Work Together

The magic is in pairing them:

  • Lagging measure: Revenue
    Leading measure: Number of high‑quality opportunities created
  • Lagging measure: Margin
    Leading measure: Price realization on new quotes
  • Lagging measure: Customer retention
    Leading measure: On‑time delivery or NPS for new interactions

Leading measures predict the lagging ones.
Lagging measures validate the leading ones.

🎯 The Bottom Line

  • Leading measures = drivers of performance
  • Lagging measures = results of performance
  • You need both, but if you want to change the future, you focus on the leading ones.

As producers, we often obsess over lagging measures because they’re clean and easy to report. But they only tell us what has already happened. They can’t tell us whether we’re making a difference right now.

And as someone who likes to make a difference, I think we should spend far more time on the leading measures — the ones we can actually influence.

Yes, I’ve spent the last couple of weeks talking about our lagging measure (price uplift). But that’s because lagging measures are how we discover what needs to change. We build leading measures from the patterns we see in lagging measures. The history teaches us what to track next.

📣 Call to Action

Take a look at the metrics you currently report.

Label each one as either a leading or lagging measure.

If you discover that most of your metrics are lagging — and most companies do — then build at least one leading measure that connects to each lagging one.

Lagging measures tell you where you’ve been.
Leading measures tell you where you’re going.
And if you want a GPS for your business, you need both.

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