The Pricing Dilemma for Mid-Sized Companies: Why Fractional is Catching On

Is Fractional Pricing "just right" for Mid-Sized Companies?

Mid-sized companies recognize that pricing fundamentals drive profit and fuel growth, but establishing an effective pricing capability remains a challenge. How can organizations in the $250M-$5B range develop the ongoing pricing discipline they need?

"We need a pricing function that can continuously identify and drive value, not just a one-time fix."

This sentiment comes from executives at mid-sized companies caught in a structural gap. While the data suggests pricing improvements can deliver significant profit gains, these leaders aren't looking for dramatic overhauls that might disrupt their business. They need measured improvements that fuel growth without blowing out the pilot light—incremental, sustainable changes that strengthen the business quarter after quarter without risking what's already working.

"We've always seen pricing as a key growth driver," explained James Thornton (not his real name), CFO of a $750 million manufacturer. "Our challenge has been finding a way to establish the ongoing discipline—someone who can provide both day-to-day guidance and board-level strategic insight."

Current economic conditions including inflation, supply chain volatility, and tariffs make the timing particularly advantageous to start now. These factors create natural opportunities to reset pricing architecture and have strategic pricing conversations with customers.

The Traditional Options and Why They Fail

Option 1: Promote From Within

Many mid-sized companies attempt to build pricing capabilities by promoting existing employees who fall into two categories: those already performing pricing functions in administrative roles, or those from functional areas like sales, finance, or marketing.

The problem: Current pricing administrators typically lack the strategic skills and business acumen to operate at a senior level. They understand pricing mechanics but not how to establish sustainable processes or navigate senior leadership dynamics. Conversely, those promoted from functional roles understand their specific domain but lack the specialized pricing expertise and cross-functional perspective needed to build an integrated pricing function. Both paths lead to the same result: well-intentioned professionals unable to create lasting pricing discipline.

"We tried promoting our pricing analyst who had been running our price lists for years," one CEO confided. "She knew our pricing structures inside out, but couldn't step into the executive role we needed—someone who could sit as a peer with our CFO and CRO, drive cross-functional integration, and provide strategic insights that are board-worthy."

Option 2: Hire a Senior Pricing Executive

Recognizing the need for experienced leadership, some mid-sized companies attempt to recruit senior pricing executives from larger organizations. Despite the heavy price tag—often $250-350K annually plus benefits for a single individual—the investment initially seems justified given the potential payoff in margin improvement.

The problem: These seasoned professionals encounter two common scenarios, both ending in early departure. First, they discover they lack the infrastructure, support teams, and analytics capabilities they're accustomed to, forcing them to spend most of their time on tactical work rather than building capability. Second, after fixing the obvious issues, they find themselves overpowered for the role, with limited growth opportunities and decreased executive attention as initial wins are banked.

"We brought in someone from a Fortune 1000 company," recalled a divisional president. "He had great ideas but was used to having established systems and teams. After fixing some obvious pricing issues, our executive team started questioning the ROI. He was gone within a year."

Option 3: Engage Traditional Consultancies

Seeking external expertise, many mid-sized companies turn to consulting firms for pricing assistance.

The problem: Traditional consultancies are often highly insightful—they can identify massive value opportunities with remarkable precision. But their business model leads to one of two unacceptable outcomes for mid-sized companies, neither of which builds sustainable pricing capability.

Outcome 1: Assess and Abandon

In this scenario, consultancies conduct thorough assessments and deliver genuinely valuable insights and recommendations. The problem isn't their analytical capability—it's what happens next. They depart, leaving the company to figure out how to make these excellent recommendations sustainable. They're simply too expensive to provide the ongoing support needed to establish true pricing discipline.

"We spent $400,000 over four months on a boutique pricing firm," a COO told me. "They identified $15 million in potential improvement, delivered a 67-page report, and then handed us the bill. When we asked about ongoing support, they offered to extend the engagement at rates we simply couldn't afford. We even tried to hire just the associate who really understood our business, but the firm wouldn't allow it. Their business model requires teams, not individuals."

Outcome 2: The Implementation Trap

Many consultancies actually use assessments as loss leaders, offering highly discounted or even free assessments in exchange for the right to bid on lucrative implementation work. The real money comes from these massive follow-on engagements. While Fortune 500 companies can find budgets for these transformational implementations without breaking the bank, mid-sized companies simply don't have this kind of wiggle room. The implementation costs are well beyond their ability to justify.

Both outcomes share a common frustration: mid-sized companies often identify talented individuals on the consulting team they'd like to retain for ongoing support. However, this breaks the consultancies' fundamental business model, which relies on leverage—for every experienced manager requested, the consultancy requires 3-5 "chargeable" junior staff join them. Consultancies won't carve out individual team members because it simply doesn't fit their business model.

This cycle—whether it ends in abandonment or an unaffordable implementation—might work for Fortune 500 companies with either robust internal teams or massive budgets. But for mid-sized organizations, both paths lead to the same result: identifying opportunities they lack the sustainable capability to capture.

The Fractional Solution: Ownership from Day One

The fractional pricing model has emerged as a solution gaining traction among mid-sized companies. The key difference? A Chief Pricing Officer who takes ownership from day one, supported by essential analytics and coordination.

"Within two weeks of starting, our fractional CPO was already in our executive meetings, helping us navigate a critical pricing decision on tariff impact," explained Rachel Martinez (not her real name), CRO of a specialty chemicals company. "It wasn't about waiting for an assessment—it was about having someone who immediately became part of our team."

Her CFO colleague, David Chen, added: "The comfort of having someone with deep pricing expertise sitting at the table, helping us balance strategic intent with our annual plan, shepherding us through changes—that's what we'd been missing. They weren't just advising; they were owning the outcomes with us."

I've implemented this model with several mid-sized companies, with encouraging results. But the real value comes from building sustainable pricing capabilities that continue delivering results long after the fractional engagement ends.

The fractional pricing model works because it directly addresses the specific challenges mid-sized companies face:

1. Immediate Integration as Chief Pricing Officer

Unlike consultants focused on document delivery, the fractional pricing model provides a CPO who joins the executive team from day one. By the time a traditional consultant would be delivering an assessment, the fractional CPO has already:

• Integrated into regular executive meetings

• Identified and captured quick wins

• Begun building pricing processes

• Started the first value program

"We had an open rec for a Chief Pricing Officer position, but the headhunter told us it would take 6-9 months to fill," explained a divisional president. "Factor in another 6 months for a new hire to get up the learning curve, and we were looking at a year before seeing any real impact. We couldn't wait that long. We chose a fractional CPO to bridge the gap—we needed help now, not twelve months from now."

2. Building Sustainable Capability

The fractional pricing approach focuses on establishing processes and capabilities that work without constant external support. The CPO's 12-month commitment means they must build systems that the organization can maintain and evolve.

"What impressed us wasn't just identifying opportunities," a CEO told me. "It was how they built the capability for our team to continuously find and capture value. They knew they'd be accountable for making things stick."

3. Knowledge Transfer with Clear Accountability

The fractional pricing approach includes opportunistic capability building—transferring skills and creating internal pricing excellence through real-time situations. The CPO works alongside the internal team, building their skills at the moment of need rather than through generic training intended for a company-wide audience.

"We're learning by doing," one pricing manager noted. "Pricing challenges become teaching moments because our CPO is here to guide us through them, not just tell us about them."

As one fractional CPO put it: "I'm working myself out of a job. My success is measured by how well the organization functions without me." This mindset drives genuine knowledge transfer rather than creating dependency.

4. Cost-Effective Ongoing Support

Unlike traditional consultancies that charge premium rates for discrete projects, fractional pricing provides continuous support at a predictable monthly cost—typically one-quarter of traditional assessment f99ees paid quarterly.

"For what we'd spend on one traditional assessment, we get a year of embedded expertise," explained a CFO. "The fractional model gives us the ongoing discipline and strategic guidance we need at a cost that makes sense for our scale."

The Ownership Difference

The fundamental difference between fractional and traditional consulting comes down to ownership. Traditional consultants are motivated to complete comprehensive assessments. Fractional CPOs are motivated to build sustainable improvements that stick.

This ownership mentality changes everything:

• Success is measured by sustained business impact, not document quality

• Recommendations must be practical and achievable, not just theoretically sound

• The CPO lives with their recommendations, creating natural accountability

• Cross-functional relationships develop organically through daily interaction

"Our fractional CPO knows they'll be facing our board every quarter for a year," a CEO explained. "That creates a very different dynamic than a consultant who's gone after their final presentation."

A New Career Path

The fractional pricing model also creates new career paths for pricing professionals. Traditional pricing roles often leave talented specialists trapped in middle-management positions. This approach allows these professionals to work at executive levels across multiple companies, providing variety and impact.

"I was hitting the ceiling in my corporate role," one pricing leader shared. "The fractional approach lets me apply my expertise at the strategic level where it has the most impact."

When Fractional Isn't the Answer

While fractional pricing addresses many mid-market challenges, it's not for everybody:

1. Misaligned Leadership: If key leaders disagree about pricing as a strategic priority, no model will succeed.

2. Infrastructure-Only Focus: If an organization is primarily looking to install pricing software or systems, a systems integrator would be more appropriate.

3. Point-Solution Mindset: Some organizations just want someone to "tell us what's wrong and go away" or seek staff augmentation for pricing analytics. These companies are looking for assessments only or want to outsource pricing tasks rather than build internal capability. Fractional pricing requires commitment to organizational change, not just a quick fix or extra hands.

Getting Started: The Practical Path

For mid-sized companies interested in exploring fractional pricing, the process begins with immediate integration. The CPO joins the executive team and starts working on current pricing challenges from day one, learning the business by being in it rather than studying it from the outside.

"Our fractional CPO jumped right into our quarterly planning session on their first day," one CEO explained. "They were helping us navigate real pricing decisions immediately while getting to know our business. Once we agreed on some potential root causes of our pricing challenges, they did conduct an assessment—but by then they had the context to know what would actually work in our organization."

The Bottom Line

For mid-sized companies, establishing sustainable pricing capability is essential for growth. The traditional approaches—internal promotion, full-time executives, or episodic consulting—have proven inadequate for this segment.

Fractional pricing represents a fourth path—one that centers on a Chief Pricing Officer who takes ownership from day one, builds sustainable capability, and delivers ongoing strategic guidance at a cost structure that works. By embedding a CPO directly into the organization, supported by essential tools and analytics, it provides the continuous pricing discipline that drives both immediate value and long-term success.

The question for mid-sized companies isn't whether they need pricing capability. The question is how to build that capability in a way that becomes part of organizational DNA. Fractional pricing, with its embedded CPO at the helm, provides the answer many have been searching for.

Disclaimer: The stories and insights shared in this blog are based on my personal experiences and conversations throughout my career. While some content reflects recent events, they are drawn from a broad range of interactions with professionals across professional services, including friends and colleagues from various organizations, and do not specifically refer to or represent any single employer, past or present. Identities have been anonymized, and quotes may be paraphrased or combined for clarity and storytelling purposes. This post is a personal endeavor and does not reflect the views or proprietary information of any employer.