From Monopoly Mindset to Market Discipline
Trane: Using CVA to Unlock Value-Based Pricing
The Challenge:
When a new president took over at Trane, he saw a pricing system in disarray. Some sales teams offered heavy discounts to close deals. Others relied on inflated list prices with little connection to market reality. Margins were inconsistent. Pricing decisions were based more on habit or gut feel than strategy.
The president had experience with value-based pricing from his time at AlliedSignal. He brought in Joe Marigliano as VP of Pricing with one directive:
“We’re done pricing by tradition. Let’s price based on what we’re worth.”
That meant deploying Competitive Value Analysis (CVA) across Trane’s HVAC product lines — to understand what customers actually valued, how Trane compared, and what the market would really pay.
The CVA Breakthrough:
The CVA team worked with six business units to build Value Scorecards that captured:
- Key benefit attributes: product reliability, installation ease, energy efficiency, delivery speed, service quality, reputation, and price
- Relative importance weights based on customer surveys
- Performance ratings for Trane and key competitors
- Perceived price levels
One insight stood out:
Trane was outperforming competitors on logistics, on-time delivery, and post-sale support — but wasn’t pricing for it.
In fact, customers — especially mechanical contractors — rated Trane’s on-time delivery and service as extremely valuable. But Trane’s pricing didn’t reflect that value. The company was giving away its advantage.
The CVA Value Landscape showed:
- Trane’s overall performance-for-price was strong — but under-monetized
- Competitors with weaker logistics were pricing at similar levels
- Customers in the installer segment were especially sensitive to downtime risk and jobsite delays — and willing to pay to avoid them
Strategic Moves (Powered by CVA):
- Tailored Pricing to Customer Segment Value
Trane focused on installers, a segment that highly valued on-time delivery. CVA revealed that a single delayed delivery could cost installers thousands in jobsite disruption — making Trane’s reliability worth more than previously thought.
So Trane:
- Held firm on pricing for expedited and on-time deliveries
- Introduced service-level guarantees with premium pricing
- Reduced deep-discounting on standard orders
- Reset the List Price Strategy
Trane trimmed inflated list prices that weren’t driving real margin. Instead, they anchored pricing to the market value revealed in the Value Landscape — pricing high-performance products where they truly outperformed, and simplifying pricing where they didn’t. - Used CVA to Train Sales Teams
Salespeople were shown how Trane’s overall value stacked up — not just on product specs, but on service, delivery, and brand trust. This gave them the confidence to:
- Sell on value instead of price
- Walk away from unprofitable deals
- Communicate why Trane was worth more
The Result:
- Margins improved across product lines without losing volume
- Trane reinforced its brand premium in logistics and service
- The CVA pricing framework became a core capability — not just a one-time fix
Trane successfully shifted from a cost-plus mentality to a market-driven value pricing strategy — guided by data, not discounts.
Why It Worked:
“Before CVA, pricing felt political. After CVA, it felt strategic. We knew what we were worth — and we stopped apologizing for it.”
— [Joe Marigliano, VP Pricing, paraphrased]
By revealing where Trane truly outperformed — and who valued it most — CVA gave the company the confidence to price with purpose.