Revenue Leakage Formula

Four components of pricing cost — calculated on a $5M ARR base

01 / DIRECT
Direct Revenue Loss
$750K
ARR × 15% pricing gap
Price below willingness-to-pay. Recoverable with a single pricing audit.
02 / QUALITY
Customer Quality Cost
$200K
excess support + churn
60%+ of base is price-sensitive. Each customer costs more to serve.
03 / CEILING
Growth Ceiling Cost
$400K
per year, compounding
Thin margins block the hires and investments that drive 20–30% faster growth.
04 / LEAKAGE
Revenue Leakage
$250K
ARR × 5% billing gap
Billing errors, unapproved discounts, and contract mismatches. Fully preventable.
Total loaded cost of bad pricing $1,600,000 / year on a $5M ARR base · 32% of revenue
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