Governing Profitability: How the New COSO Corporate Governance Framework Transforms Pricing Strategy
The margin crisis hiding in plain sight—and how governance can solve it
The Silent Profit Killer
"Forty percent of our clients don't even cover their total cost of service."
The CFO's words hung in the air during that audit committee meeting at a maquiladora spanning El Paso, Texas, and Ciudad Juárez. The silence that followed spoke volumes. Here was a company focused on growth, celebrating revenue milestones, while profitability quietly bled out through uncontrolled discounts, opaque cost structures, and a culture that prioritized volume over margin.
The missing ingredient wasn't better data or more innovative pricing algorithms. It was governance.
A New Framework for an Old Problem
With COSO's launch of its new Corporate Governance Framework (CGF) in May 2025, organizations now have a structured approach to address this profitability crisis. The CGF redefines governance as a dynamic ecosystem of six interconnected components: oversight, strategy, culture, people, communication, and resilience.
This framework raises three critical questions for pricing and profitability management:
- How can governance principles strengthen profitability and cost management processes?
- Where do pricing strategy and board oversight most critically intersect?
- What cultural and structural elements enable organizations to maintain margin discipline?
Four Pillars of Profitable Governance
1. Governance as Strategic Leverage
The CGF positions governance not as a compliance overhead, but as a dynamic system that connects oversight, strategy, culture, people, communication, and resilience. Applied to profitability management, this transforms pricing from a tactical function into a strategic governance issue.
"A pricing strategy without governance is like a dam without floodgates: it can sustain the flow for a while, but eventually it will give way." — CFO, Major Retailer
Practical Application: Embedding customer and product profitability KPIs directly into board oversight dashboards creates real-time alignment between operational execution and strategic objectives. Directors can now see margin erosion as it happens, not months later in quarterly reports.
2. From Fragmented Data to Informed Decisions
Research from Pricing and Profitability Management reveals that only 3% of companies effectively manage and enforce their pricing structures. The culprit? Data fragmentation leaves decision-makers flying blind.
The CGF addresses this through Principle 17 (data quality) and Principle 19 (effective internal communication channels), creating the foundation for pricing transparency.
Case Study: An industrial manufacturer integrated its ERP system with a pricing engine and governance dashboard in Power BI. Within eight weeks, they reduced "maverick discounting" by 37% and improved gross margin by 2.4 percentage points—proving that governance-driven data integration delivers measurable results.
3. Building a Culture of Commercial Discipline
Margin-focused culture isn't built through mission statements—it's engineered through incentives. The CGF's Principle 15 expands the compensation committee's mandates to ensure that incentive plans align with profitability priorities, not just revenue targets.
Transformation Example: A consumer goods company redesigned sales compensation to include net profitability per customer rather than pure volume metrics. The result? An 11% EBITDA improvement in under six months, as sales teams began naturally gravitating toward higher-margin opportunities.
4. Resilient Profitability in Uncertain Times
The CGF's resilience component introduces real-time risk and opportunity governance (Principle 21). For profitability management, this means modeling price elasticity scenarios, regulatory disruptions, and the impact of AI on cost structures before they are reflected in the bottom line.
This shift is fundamental: pricing decisions are no longer purely commercial—they're governance decisions with strategic, financial, and reputational implications across the enterprise.
The Governance Imperative
The margin is governance, not just finance.
This isn't about setting higher prices. It's about asking the right question: Are we governing profitability in a way that aligns with our strategy, culture, and capabilities?
Integrating the COSO CGF framework with pricing and cost management disciplines transcends compliance—it becomes a competitive strategy. By treating profitability as a governance issue, organizations can anticipate crises, align incentives, and make decisions with collective intelligence rather than departmental silos.
The Time Is Now
The moment to govern profitability isn't after a quarterly loss—it's now. Every poorly managed pricing decision isn't just a technical error; it's a governance failure that compounds over time.
Organizations that embrace governance-driven profitability management will separate themselves from competitors still treating pricing as a tactical afterthought. In an era where margins face pressure from every direction, governance isn't just good practice—it's survival.
Literature Referenced:
- COSO (2025). Corporate Governance Framework - Public Exposure Draft.
Pedro San Martín is a Principal at Asher | PwC Interamericas. He can be contacted at psanmartin@asheranalytics.com