Room to raise the ceiling: management says its own prices, rates, or terms sit below what the market would currently bea
The model's full reasoning — Q2 2023 call → NOWe need to determine if management conveys that the company is currently charging less than what the market would bear, and that they are actively closing that gap. Look for statements about pricing, price increases, undercharging, etc. In the transcript, there are mentions of pricing changes. For example, Justyn Howard mentions "ongoing execution on our pricing changes" and "pricing changes" in context of ACV growth. Also, Joe Del Preto discusses "price lifts" for existing customers, saying they range from low-middle single digits to low-middle double digits, and that in larger deals it's about bringing more users or products. He says "we are feeling really good about the price lifts for the existing customers that have rolled out it throughout the year." Also, there is mention of "pricing changes" and "strategic changes" that impacted low end. But does management explicitly say they are undercharging relative to value? They talk about price increases being accepted, but not necessarily that they were below market. They mention "pricing changes" as a strategic move, but not that they were leaving money on the table. They also mention "premium module attach rates" and "ACV growth" but that's not about undercharging. The question asks: does management convey that the company is currently charging LESS than what the market would presently bear? That is, they have a gap between price and value, and they are closing it. In the transcript, they discuss price increases, but they don't explicitly say they were undercharging. They say "ongoing execution on our pricing changes" and "price lifts" but that could be just normal price increases. They also mention that they are "deliberately deprioritized and removed resources from this part of our business" regarding low end. They talk about "pricing changes" as a strategic move to move upmarket. But is there a claim that they were undercharging? Not really. They say "we have decisively modeled our lowest customer tier ARR to decline to zero" which is about removing low end. They don't say "we were charging too little for our product." They talk about "premium module attach rates" and "ACV growth" but that's about selling more, not raising prices. Look for specific language: "undercharging", "below market", "leaving money on the table", "pricing power" etc.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| MEC | Mayville Engineering Company, Inc. | Q3 2022 | 2022-11-05 | B+ |
| CAG | Conagra Brands, Inc. | Q2 2017 | 2016-12-22 | C+ |
| SOHO | Sotherly Hotels Inc. | Q3 2016 | 2016-11-08 | D |
| RCL | Royal Caribbean Cruises Ltd. | Q1 2016 | 2016-04-29 | C+ |
| HPP | Hudson Pacific Properties, Inc. | Q4 2015 | 2016-02-25 | C |
HPP · Q4 2015 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly describing a gap between its current charges and what the market now supports, then confirming that the company is already closing it through mark-to-market resets and higher new/renewal rents. Victor Coleman states that the company has “rolled out 80% plus mark to market” on recent leases 2.5 years old, and that cash rent spreads on 1.6 million square feet executed since the acquisition were “north of 30%” with “20%, 25% mark-to-market for 2016 and 2017.
MEC · Q3 2022 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices sit meaningfully below the value custom...YES Management explicitly states that they have taken pricing actions in 2022 and have "more room for margin expansion through continued value pricing even beyond the pricing actions taken during 2022." This conveys that their current prices sit below what the market would support, and they are actively beginning to close that gap with further value pricing.
SOHO · Q3 2016 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly identifying a rate gap at the Laurel hotel (and similar situations at other properties) where current charges sit below the competitive set/market, while describing active steps already underway to close that gap through continued ramp-up and occupancy/rate improvements.