The gap between what your members pay and what they would actually pay. Most operators see the rectangle on their P&L. The triangle above it is revenue the current structure fails to capture.
Every TMN diagnostic measures the triangle and identifies which of the 5 plays captures the most value the fastest.
The triangle is largest in businesses with recurring revenue, multiple customer segments, and pricing that has not been reviewed in 12+ months. That describes most PE-backed service businesses in car wash, fitness, med spa, self-storage, and home services.
A 1% improvement in pricing drives 8 to 11% improvement in operating profit. That leverage ratio is why pricing should sit at the top of every PE value creation plan. The triangle is the shape of that uncaptured value. Most operators have never tried to measure it.
See where your pricing is underperforming.
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