The Private Equity Podcast Featuring Jared Wiesel: The Pricing Advantage — Easy EBITDA Wins

Jared Wiesel, SVP of Manufacturing & Distribution at Revenue Analytics, sat down with The Raw Selection’s Private Equity Podcast to discuss why pricing is the most overlooked – but most powerful – lever in value creation for PE-backed manufacturing and distribution firms.

Check out the episode here or read the full transcript below.

Alex Rawlings: Welcome back to The Raw Selection Private Equity Podcast. Joining us today is Jared Weasel, Senior Vice President at Revenue Analytics. He focuses specifically on the manufacturing and distribution sector, working with private equity firms and their portfolio companies all around pricing. Today, we're obviously going to deep dive into pricing, how you can lever your EBITDA and improve margins, equally meet the percentage increase, which typically loses absolutely no customers, that you can drive EBITDA and margin improvements immediately.

Let's dive in.

Jared, if you can share a brief insight into you.

Jared Wiesel: Yeah, first, thanks for having me on, Alec. We're looking forward to the conversation. I lead the manufacturing and distribution sector at Revenue Analytics, where we help companies optimize their profits through better pricing and commercial decisions. So really, what does that mean? My day is working with private equity firms and their portfolio companies about how we leverage data to help them make more targeted pricing decisions, make sure those pricing actions stick in market, drive better sales compliance,  and drive a better, more optimal product mix. We achieve this through a unique service that blends technology and strategy to deliver an ongoing capability versus the one-time consulting study. And we really think that's kind of a big unlock in this space.

Personally, I've been at revenue analytics for 11 years, but have been in the B2B analytics growth area for the last couple of decades through a variety of consultancy roles, as well as leading pricing teams in industry. I live in Panhandle of Florida, and have two young daughters that keep me very busy when I am not thinking about pricing.

Alex Rawlings: The distraction from pricing to young daughters. Love that. What's one mistake that you see private equity firms or portfolio companies making and what would you suggest to grow?

Jared Wiesel: Yes, we see that most private equity companies don't prioritize practicing in commercial margin as part of their VCPs. And when they do, they think of it as a singular point in time action versus a continuing process.

I think maybe just unpacking that a little bit before we dive into how to correct it, you know, historically, we've all seen the stats. Private equity has had a fantastic run leveraging the financial, you know, leverage dimension, right, as well as multiples expansion and then revenue growth. And margins really been kind of an afterthought.

Any historic human margin has been part of it. It's usually more on the cost outside, right? There's two different ways to drive margin. You take cost out or you get a better price. And historically cost out, especially in like the industrial space, feels really safe, but you start to see that there's a diminishing return to that.  And so oftentimes where we're really spending time is educating folks on the power of pricing, right?

There's been a classic study that's been repeated many, many times by McKinsey that it says, you know, for a 1% improvement in price, you're going to get more than 50% incremental impact to the bottom line than you would by the same size reduction in cost or increase in volume, right? We really spend a lot of time evangelizing around why pricing should be part of that value creation plan. Then get into how do you actually go about doing it, which is the second part of the trap, right? Where historically pricing is thought of as a one-time pricing action. Hey, it's January. I need to take an increase, right?

While that can be powerful, it's also really scary. We're big believers that pricing should be an ongoing action because you're making pricing decisions every day, whether the company's aware of it or not. sense.

Alex Rawlings: So, beyond the simplicity of pricing increases, which makes a lot of sense, lot of newly private equity BAT businesses are nervous around doing that. Private equity firm comes in, unlocks a lot of revenue increase and hopefully profit from that play.  Beyond that, simplicity of increasing prices, how should companies be leveraging the pricing conversation?

Jared Wiesel: Yeah, absolutely. There's a couple of different pillars of opportunity here. Some of that is dependent on how the companies go to market. But a classic one is, what about all the new business opportunity you have? And so most think about it as an increase. Well, the increase is mostly really on your existing base of customers.

But then every day till next January, your sales reps are likely out there or e-commerce channels or wherever the transaction takes place, bringing in new opportunities. And oftentimes we see that's really where the biggest leak point is because historically in this space, when you haven't focused on pricing, you give sales reps a lot of autonomy to quote unquote, get the deal done, right? They know their customer, they know their market. And what we find is that prices can vary 30, 40, 50, 80% for a given widget across sales reps for no rhyme or reason, then they're just kind of based on their gut and their last action.  And now on the flipside of that and in fairness to them, they usually don't have the capabilities to know any better. So, we're really there to help them drive a more targeted segmented price structure and give them some guardrails to operate around. That's going to drive more consistent pricing in the market. And that can be a huge, huge pillar of opportunity.

The second one is bringing more visibility. Right. When you have that mindset of, “I'm just going to take an action once a year,” well, what do you do? You measure that one action and then you go about the rest of your year until it's time to do it again. Right. And, what happens, and we're seeing it obviously exacerbated with things like tariffs, but even in a more stable economic environment, markets change, product mix changes, customers change. There's constantly points of profit that you need to drive first and foremost that the visibility around where are they? And then deploy the actions to go take them. So how do we address unprofitable customers or products? How do we address customers that aren't bringing the volume that they committed to, to get that “super-secret special price,” right? You start to get a number of different plays that you can continue to eke out incremental basis points of improvement over the year in a much more risk adverse way than the,  we're going to take a 10 % increase to market January 1 and hope it sticks and hope the customers stick around.

Alex Rawlings: So, you've got a strong consulting background and work for various different, you know, leading consulting brand names, et cetera. When you look at pricing from an initial investment basis, the general premise I see from private equity firms is usually the founder hasn't increased the value of its product or its service and there's an opportunity to play there. But from either now or previously, where do you begin to pull the levers as to what market looks like and what good looks like, what great looks like from a pricing perspective beyond  What I've been taught around pricing is keep putting in the pricing until they don't want to buy it. And then somewhere below that, there was a good spot or maybe it is that.

Jared Wiesel: Yeah. know, in fairness, Alec, I think your way, if folks were doing a lot of that, I think there'd be a lot more profitable companies. Right. So, I think because there is that to your exact question out of the gate, like there is that emotional hurdle or barrier to pricing. Right. Especially for these founder-led companies, they are pillars in their community, they know their customers. And I've been selling you that widget for 10 bucks. You know, and I'm scared to go back to you and ask for 12. What if you leave? What if I hurt the relationship? And so sometimes it really is just about how do we build the confidence to get them to go try, right? Is really a lot of it. But I think where we actually take a little bit of a different approach than the classic consulting mindset, which is I really believe we've got to start with where's the pain, right? Everybody conceptually believes in the gain of pricing, right? But that doesn't usually overcome those barriers around emotion and perceived risk, right? You have got to find that impetus for change that usually is anchored in pain. And that might be explicit to pricing or it might have a glaring need to take pricing action because this customer is unprofitable, but it might be more of a downstream symptom. For a lot of our customers, what we find is they may not be aware it's a pricing problem, but we'll hear things like, well, it's taking longer for us to produce a quote, right? Or to close business, or we're spending a lot of internal time digging through data. If you go upstream, a lot of that is a pricing problem. And the downstream implication is you're just spinning your wheels.

If we had a customer take them two weeks to produce a quote for their paper products and customers would say, their customers would say, how do you not know the price of your product? It's like, well, we don't know what it is for you. We got to have free internal debates and meetings about it. Then we got to go pull some more data. Then we got to call the factory about capacity. And next thing you know, you've spent two weeks in internal admin, right? When there are actually analytics that could help you speed that up. Anchor on that pain. Solve that pain. Find the, “what's in it for me,” and then build the capability around that. So really what we're trying to do is just repeat, you know, what your best sales reps and commercial folks do at scale.

Alex Rawlings: If we look at the investment lifecycle of a private equity firm into a portfolio company in a hugely subjective manufacturing distribution, what does the value creation playbook look like from a pricing perspective, from a new investment to medium term hold period to obviously exit process? What should they be looking at at each stage in order to go, this is what we should be doing for a pricing perspective to drive value?

Jared Wiesel: Yeah, such a fantastic question. Obviously, as it loops out of the gate, most aren't even looking at pricing, which is where I'm spending most of my time. But for the folks that are and are doing it well, and I think we're seeing a lot more of this rise of this commercial slash pricing operating partner that's being brought in to do this. In the diligence, it's really about two things. It's about identifying, the past pricing performance. So our price is all over the place, like I described, or they're loose guard rails for sales reps. And when was the last time you took an increase? Right. If you can really answer those three things, you're going to probably hone in on ig there a good pocket of opportunity to act on price, right? Secondly, becomes if they have the systems and capabilities to go execute it? A lot of these companies are so old school from a technology perspective that you got to make sure to think about how do you blend those two together.

When we partner with private equity companies and to do the diligence and then early in the whole period, the early whole period is all about a dual combination of how do you find some quick wins, right? So how do you go after that pain that I was talking about? Cause you really have to build momentum in our experience. You know, when these companies are being, you know, bombarded with all these different strategic plays that the private equity team wants to make and all these different moving parts, like we got to find some early wins to anchor the change on. And then it's about getting the foundational capability in place.

So that in the middle and back end of the whole period, it's really about extracting that optimal value, right? How do we keep tweaking and tuning the knobs to shut off the margin of leak points, to be more optimal in market, deliver the type of impact pricing could have, and then help them paint the exit story that with this capability in place, there's more to be had for whoever the next owner may be.

Alex Rawlings: When you look at when a company, we'll focus on distribution manufacturing for simplicity, increases its prices and goes down the simple process of, we've just been taken over, we're going to put the numbers up, we've not done it for 10 years,  inflation, there's a bit of a gap in there. If there is any correlation here, is there an area where, look, if you typically, from what we've seen, the averages are you will usually lose no customers if you make this level of increase. Our recommendation usually is to make this level of increase because the number of customers that you lose means that you actually increase overall revenue and you've got less customers for it. What do those kinds of numbers look like so people can actually go away and hopefully take some action?

Jared Wiesel: Yeah, think of course in classic consulting answer fashion, Alec, a little bit, depends, but where I'll give you some more concrete answers, it depends on kind of two factors. You know, the various sub industries have different kinds of pricing behaviors, right? So, if we're talking a paper and packaging company versus a building products, you might have different kinds of ranges there. And then it's really how outdated they are in their pricing obviously could lead to how much of an order of magnitude to move you could make, right? Without experiencing a major risk aversion.

What we traditionally see though, if I were to roll that all together into one number, you should absolutely be able to go achieve somewhere between a 3% 7% increase with minimal to no loss in volume. Now, the devil's in the details there though, right, is we are not believers in what we call the peanut butter spread increase, which is, okay, great, I'm just going to take five points to everybody, right?  Where you think about it is if your customers are highly varied in their pricing today, you have to be very surgical in this. It's the folks that are disproportionately paying below their peer set that maybe you could get away with a 10, 12, 15%, but the folks that are already paying well above their peer center market, maybe you don't touch it all. You have to take a little bit more of a portfolio play. That's really the key to reducing their risk versus a lot of folks will just say, raise everybody. And then they get surprised when some small customers that were already paying 50 % more than everybody else walk out the door.

Alex Rawlings: Where should people go from here, I find when people are in specialist areas, they tend to have specialist knowledge that isn't just from the company that they're in. If I'm a CEO of a product that backs manufacturing business or insert any industry really, where would I go about finding out more about what I should do with pricing to begin to understand where the potential levers are and what I should, you know, to give me a baseline of knowledge if I've previously avoided the subject through fear of customer loss.

Jared Wiesel: Yeah, no, absolutely. I think there's a couple of different watering holes and candidly, it's probably underserved in terms of specific kind of manufacturing and distribution content. Pricing Brew, which is a blog and newsletter and training platform, has a lot of really good tactical content for those operator executors. How do I think about segmentation? How do I build a sales rep buy-in? Those are the types of webinars I had or podcasts I've spoken on. There is the Professional Pricing Society, PPS, which is kind of a cross industry, probably the biggest pricing play out there.

The third bucket is probably more specific to books, right? I have to give the shameless plug. Our retired chairman, who founded the company with his sons multiple decades ago, wrote kind of the seminal book on the space called Revenue Management: Hardcore Tactics for Market Domination that really brings real life use cases to bear on concepts like customers having different willingness to pay, right? And how do you optimize and vary pricing based on different signals in the market? I think this is a really core one.  The last plug I would make, I've been reading it recently.

There's a book called Pricing, the New CEO Imperative. I think what we typically see in this space, and I love your question, but most of the time pricing isn't on the CEO's radar screen, at least until something like tariff comes up, right? And this is actually a collection of articles and viewpoints from pretty much all the major pricing vendors out in the space packaged into a book written specifically for the C-suite on why pricing should matter.

Those are a couple of things that I would throw out there. Of course, you can come to the Revenue Analytics website. I'm always happy to chat as well.  But I think it's, I'm much more of the evangelist that just says, let's just get started in something, whether it's with us or somebody else, right? There's just a huge untapped opportunity in this space for sure.

Alex Rawlings: What do you say to people that are maybe little hesitant, that ignore this opportunity for price increases? How do you encourage them to at least give it some further consideration?

Jared Wiesel: Yeah, so I think the identification of the pain, as I alluded to earlier, is a big piece to that. I think another angle we often talk about is the disconnect between the other actions you're doing and the value they're going to drive versus what you could be doing with pricing. I'll give you a quick story.

We worked with a paper products manufacturer with incredible operators. That's just where they came up on that side of the business. For the longest time, they had these strategic initiatives about how do we drive literally pennies of cost out of a pallet of these paper goods. That's a great aspiration if you're selling hundreds of thousands or millions of pallets, but then we have the discussion with them, okay, well then what happens when the sales rep goes to market?

Well, the sales rep can negotiate a discount up to 50% off. And so that just illuminating that disconnect of like your team is breaking their back to save two pennies a pallet. And a sales rep can literally with the flick of an email, give away hundreds of dollars of a pallet and discount. And not all discounts are bad, right? But just trying to educate on that value prop disconnect of the leakage point completely offsetting and by order of magnitude eroding the efforts of the other part of the business. And you need to take that blended approach, I think was the way I love to talk about it.

Of course, the third one candidly is the last number of years when you go from COVID to inflation now to tariffs, it's just forcing pricing on the docket for a lot of folks because they have to act. And then it's about how do you broaden the aperture from the media pain to this needs to be something that is always on, kind of going back to one of my earlier points is pricing can never be a point in time solution because there's always going to be that next event, if you will, that you have to be prepared for.

Alex Rawlings: You referenced some books on  where we can find pricing, but aside from the pricing topic – what are your influences? What do you read, watch, listen to that you recommend others listening to podcasts to check out?

Jared Wiesel: Yeah, absolutely. So of course I do listen to this podcast, very earnestly saying that. A number of others in the PE space, like of course Bain's Dry Powder. You know, I'm just constantly trying to consume what other trends are out there and think about how it starts to overlay with my area of focus. So, I think those are big ones.

Lots of reading in the private equity space. Of course, like Adam Coffee, one of the go-tos there, the Private Equity Playbook has been a fantastic foundation. Dan Kremen's Weighing Moves actually is probably one of my favorites, just because I love how he's kind of decomposed the different levers of value creation all the way down to tactical plays.

I think to me, as you can probably pick up from some of this conversation, because we stick around and help companies execute, that's where the rubber hits the road. It's one thing to just say, “You should lower your costs and raise your prices,” but it's like, how do we actually get you down to like, “these are the moves that are going to help you go after that.” So think that's, that's probably more industry specific. I'm also just kind of a finance geek. So, obviously this day and age spending a lot of time just trying to understand what's going on in the world and reading various, you know, financial news articles, those types of things. I think are the big, big buckets from a professional perspective.

Alec: Yeah. A lot of people are trying to work out what on that.

Alec: You referenced the Revenue Analytics website and finding you on there. Is that the best place to reach out to you, Jared?

Jared Wiesel: Yeah, absolutely. They can also reach out. My email is jweisel@revenueanalytics.com. You can also find me on LinkedIn, I am happy to connect. As I mentioned, I spend most of my day just evangelizing on why pricing should be part of that value creation plan. I think it's a small but rising tide of commercial operation focused folks in this space. And I think there's just a huge opportunity to continue to tap into a lot of the value that these fantastic manufacturing distributing companies have built around kind of delivering exceptional products and services to their customers. I just want to make sure they get fairly compensated for it going forward.

Alec: Well, thank you very much for coming onto the podcast. Thank you very much for sharing a very narrow approach to something which I actually quite like on the podcast. It gives us really clear actions we can drive on. So, thanks for coming on and discussing everything.

Jared Wiesel: Really appreciate the opportunity, Alex.

Alec: And thank you very much for everybody yet again tuning into the Private Equity Podcast. If you haven't done so already, please do subscribe to the podcast. And if you do have a moment, leave us a review as that helps us reach other people within the private equity industry. But till the next time, keep smashing it. And thank you very much for listening.