Priceberg, right ahead!

The way in which firms generally start to formalise central roles and responsibilities around pricing creates a visibility gap, and false sense of confidence around where profit leakage happens

For the most part, firms start with a single hire, or small pricing team, to "see how it goes"

And how it goes, inevitably, is that the pricing team is immediately constrained by that limited resource. Naturally they therefore prioritise that resource for impact - e.g. setting policy, annual rate reviews, implementing some governance around write offs (e.g. review over £x or y% threshold) and limiting hands on support to the bigger pitches and opportunities that come into the firm, illustrated here:

Central pricing activities above the waterline

As the quick wins rack up, the pricing team can justify expanding and increasing visibility above the waterline

All well and good

However, for every win above the waterline, you can bet your bottom dollar there's leakage below, illustrated here:

Decentralised pricing activities below the waterline

By volume, the majority of pricing decisions are made with a high degree of autonomy by individual partners. FWIW, I think this is how it should be, but I'll save that soapbox for another time!

The implications of this are that for every margin win on the centrally supported 3 year panel appointment, there's margin leakage across 100's of matters priced without central oversight

Alternatively, for all the sophisticated modelling to support a decision to increase hourly rates this year, there are countless fixed fee schedules in practice groups that haven't been updated for years

If you want a steer on how effective your write off policy is, take a look at how many matters fall below the threshold at which central review is intended to kick in. For most firms, most matters will likely fall below the threshold. Bonus points - I'd wager that you have a statistically implausible number of matters priced just below your policy threshold

All of which is to say - yes, there is definitely value in growing the central pricing team and gearing that support towards high impact initiatives

But you're never going to cover the pricing and profit leakage below the waterline through that incrementalist approach

Ultimately, you need to combine specialist pricing expertise with upskilling partners more generally, such that they can price work profitably and give you coverage both above and below the waterline