Is Your Pricing Strategy Holding You Back?
Pricing Pointers, Issue #40
You may have seen these posts by me in your LinkedIn feed (like Substack Notes) before, but never quite like this. I’ve curated five of my core pricing pointers into a single, logical sequence to help you stop treating value as an objective measurement.
This collection challenges the “middle ground” instinct many business owners have. Doing so reveals why fixating on a single price point is a misstep that restricts your profit and market reach.
1️⃣ Surprising fact: The value of your product or service is not an objective measurement.
It’s subjective.
It’s based on the buyer’s perception of the benefits they will receive from it, and it can change depending on their circumstances.
You can increase (or decrease) the value of your product or service change simply by moving it to a different time, place, or person.
2️⃣ If your business charges everyone the same price, you are guaranteed to leave money on the table.
It’s a fundamental principle of buyer psychology. Customers have wildly different willingness to pay for the exact same thing.
By enforcing a single price, you are simultaneously too expensive for one segment (losing sales) and undercharging another segment (losing potential profits).
Stop treating your customers as one homogenous group.
3️⃣ The single biggest fallacy in pricing is that you must choose between sales volume and profit margin.
Many business owners believe that pricing has to be a difficult “either-or” decision: either raise prices and lose sales, or lower prices and cut into profit.
That thinking is limiting and leaves money on the table.
The truth is that you can capture high-value customers and attract price-sensitive ones at the same time.
The strategy is called differential pricing, and it hinges on the simple fact that value is subjective.
When you accept the fact that the value of your product or service depends on who you ask, you unlock a path to increasing both sales and profit simultaneously.
4️⃣ One of the biggest pitfalls in pricing is trying to find a “middle ground” price.
This common approach tries to please everyone but ends up costing you sales and profits on both ends of the market.
There are two distinct profit losses caused by this misstep:
Profit Loss 1: You push away sales and profits from price-sensitive buyers who would pay more than your unit cost but less than your asking price.
Profit Loss 2: You leave money on the table from buyers who possess a willingness to pay that’s greater than your asking price.
As you can see, pursuing a “middle ground” pricing strategy is capping your sales and profits.
Avoiding this misstep means shifting your focus from a single price point to a range of price points.
5️⃣ How do you navigate buyer demands for lower prices without hurting your bottom line?
Responding to buyer demands for lower prices requires a smart strategy.
Instead of across-the-board price cuts that harm profitability, savvy businesses pivot to strategic alternatives.
Across-the-board price cuts often require an unsustainable increase in sales volume to maintain profitability.
They can also be easily matched by competitors.
Instead of broadly lowering prices, consider these two alternatives:
[1] Give them more for the same price: Offer a larger quantity, a better quality, a supplementary product, faster delivery, etc. This adds perceived value without discounting.
[2] Give them less for a lower price: Create a no-frills version of your product or service, offer it at a less desirable time or place, etc. This gives the buyer a “win” without devaluing your core offering.
The Bottom Line
By letting go of the objective value myth, you can harvest more of the actual value you’re creating in your market. Stop looking for one perfect price. Instead, start designing a range of prices that will appeal to different segments of customers.