Price Band Strategies for Smarter Pricing Decisions

Price isn't just about a number—it's about the mental model that supports it. 🧠 When OpenStore approached us about OpenDesk—their AI customer support tool for eCommerce brands—they faced a classic behavioral challenge: pricing doesn’t exist in a vacuum. The behavioral POV on value is that it’s subjective and created in the moment. That was true here, too. It wasn't actually the price point that was holding them back. It was the invisible mental accounting happening in customers' heads. 😬 Merchants mentally categorized support tools as expenses, not investments. This mental accounting created a pricing perception problem. When something falls into your "expense" bucket, your goal is to minimize it. When it's in your "investment" bucket, you evaluate ROI instead. 💡 When we reframe the value proposition, willingness to pay changes. Instead of "better customer support," we positioned OpenDesk as a "customer retention driver" – shifting its category from cost center to revenue generator. With this new mental model established, we designed pricing strategies that reinforced this investment framing: 💲 A hybrid model combining subscription + per-ticket charges that balanced predictability with value 🔢 A usage-based option with an interactive calculator that made total costs transparent—similar to how merchants evaluate ROI on other investments 👥 A per-seat model that simplified budgeting while aligning costs with team structure Curious to see where they landed, or to get ideas on optimizing product positioning or pricing strategy? 👇 Check out the case study in the comments. #BehavioralDesign #AIStrategy #ProductPricing

A revenue manager showed me why their 89-room boutique hotel consistently outperforms 300+ room chains in the same market. The secret wasn't superior amenities or location—it was a single pricing decision most hotels get completely wrong... 𝐓𝐡𝐞𝐲 𝐬𝐭𝐨𝐩𝐩𝐞𝐝 𝐜𝐨𝐦𝐩𝐞𝐭𝐢𝐧𝐠 𝐨𝐧 𝐫𝐚𝐭𝐞. While competitors frantically adjust prices based on occupancy and market demand, this property discovered something counterintuitive: guests don't just buy rooms, they buy the story their spending tells about themselves. Three pricing psychology principles that transformed their revenue strategy: • 𝐓𝐡𝐞 𝐚𝐧𝐜𝐡𝐨𝐫𝐢𝐧𝐠 𝐩𝐚𝐫𝐚𝐝𝐨𝐱 - Displaying their highest suite rate first makes standard rooms feel like smart choices, not budget compromises • 𝐓𝐡𝐞 𝐬𝐜𝐚𝐫𝐜𝐢𝐭𝐲 𝐚𝐮𝐭𝐡𝐞𝐧𝐭𝐢𝐜𝐢𝐭𝐲 𝐭𝐞𝐬𝐭 - Only showing "2 rooms left" when it's genuinely true creates trust that multiplies future bookings • 𝐓𝐡𝐞 𝐯𝐚𝐥𝐮𝐞 𝐩𝐞𝐫𝐜𝐞𝐩𝐭𝐢𝐨𝐧 𝐥𝐚𝐝𝐝𝐞𝐫 - Guests who pay ₹12,000 for a room spend 40% more on property than those paying ₹8,000 for the same room The breakthrough insight? Price isn't just revenue—it's guest behavior programming. Higher-paying guests don't just have more money; they arrive with different psychological expectations that drive ancillary spending, positive reviews, and referrals. Most surprising discovery: Their average rate increased 28% while occupancy stayed constant. Guests weren't price-shopping anymore—they were experience-shopping. 𝐈𝐬 𝐲𝐨𝐮𝐫 𝐩𝐫𝐢𝐜𝐢𝐧𝐠 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐲 𝐬𝐭𝐢𝐥𝐥 𝐜𝐡𝐚𝐬𝐢𝐧𝐠 𝐜𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐨𝐫𝐬' 𝐫𝐚𝐭𝐞𝐬, 𝐨𝐫 𝐡𝐚𝐯𝐞 𝐲𝐨𝐮 𝐬𝐭𝐚𝐫𝐭𝐞𝐝 𝐩𝐫𝐨𝐠𝐫𝐚𝐦𝐦𝐢𝐧𝐠 𝐠𝐮𝐞𝐬𝐭 𝐛𝐞𝐡𝐚𝐯𝐢𝐨𝐫 𝐭𝐡𝐫𝐨𝐮𝐠𝐡 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐩𝐫𝐢𝐜𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐢𝐧𝐠? #HotelPricing #RevenuePsychology #GuestBehavior #HospitalityStrategy

From 15% to 31% close rate in weeks. One pricing decision changed their business. Here's how to replicate this result... Something I've noticed working with B2B founders: Most are making pricing decisions based on gut feelings… …instead of actual market data. Here's what happens: They launch with pricing that "feels right" or matches what competitors charge. Then they wonder why deals aren't closing or why they're constantly negotiating down. The problem? They're missing the real insights sitting in their own data. For example, I worked with a SaaS founder who was pricing at $99/month because that's what seemed "reasonable." But when we analyzed his deal patterns, we discovered something interesting: Customers who paid $199/month had 3x higher retention rates and generated 40% more referrals. Why? Because higher-paying customers were more committed and saw greater value. We also found that 67% of his lost deals weren't about price - they were about unclear value positioning. So we restructured his pricing strategy based on: - Deal pattern analysis - Competitive context research - Customer feedback extraction - Growth opportunity mapping Result? His average deal size increased by 180% and close rate jumped from 15% to 31%. The lesson? Stop guessing what your product is worth. Start analyzing what your customers actually pay for and why. Your pricing should reflect real market evidence, not assumptions. ________________________________ 👋 I’m Marina Kogan 🌊 Follow for more insights on GTM strategies

For over a decade, I've worked alongside mid-market CPG brands ($50MM - $1B revenue), and the story is often the same: smart people, great products, but struggling to maintain profitable growth in the face of relentless pressure. Trade promotions that don't deliver and subsidize baseline sales, competitor price wars, and the constant battle for margin across the value chain. It's exhausting, and frankly, it's often unnecessary. This isn't about "tough market conditions." It's about having the right system for Pricing and Revenue Growth Management Analytics and processes. It's about moving from reactive firefighting to a proactive, insights-driven strategy built on a foundation of integrated/harmonized data and some essential predictive analytics/scenario analyses (no fancy AI). 𝗛𝗲𝗿𝗲'𝘀 𝘁𝗵𝗲 𝗿𝗲𝗮𝗹𝗶𝘁𝘆 𝗜 𝘀𝗲𝗲 𝗺𝗼𝘀𝘁 𝗼𝗳𝘁𝗲𝗻: • 𝗣𝗿𝗼𝗺𝗼 𝗥𝗢𝗜? 𝗔 𝗕𝗹𝗮𝗰𝗸 𝗕𝗼𝘅. Many brands are flying blind, repeating promotions without knowing if they generate incremental profit. Retail buyers are often in the dark as well. We're talking about potentially wasting 10-20% of gross revenue on ineffective trade promotions. • 𝗖𝗼𝗺𝗽𝗲𝘁𝗶𝘁𝗼𝗿-𝗗𝗿𝗶𝘃𝗲𝗻 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 𝗣𝗮𝗻𝗶𝗰. Reacting to every competitor's move leads to a race to the bottom. You need the proper Pricing RGM intelligence and scenario planning, not knee-jerk reactions. • 𝗧𝗵𝗲 𝗣𝗿𝗼𝗳𝗶𝘁 𝗣𝗼𝗼𝗹 𝗠𝘆𝘀𝘁𝗲𝗿𝘆. Who's benefiting from your promotions? Are you subsidizing your distributors or retailers? The lack of transparency here is a significant margin leak. It doesn't have to be this way. Here's how to take back control: 1. 𝗧𝘂𝗿𝗻 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗮𝗻𝗱 𝗲𝘅𝘁𝗲𝗿𝗻𝗮𝗹 𝗗𝗮𝘁𝗮 𝗶𝗻𝘁𝗼 𝗔𝗰𝘁𝗶𝗼𝗻𝗮𝗯𝗹𝗲 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 𝗮𝗻𝗱 𝗽𝗿𝗼𝗺𝗼 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀. Stop guessing. Implement a driver-based revenue and margin analysis to isolate the true impact of price, volume, mix, and competitive actions. Promo ROI capabilities enable you to reallocate spend to profitable promotions and strategically adjust pricing or product mix. 2. 𝗣𝗿𝗲𝗱𝗶𝗰𝘁, 𝗗𝗼𝗻'𝘁 𝗥𝗲𝗮𝗰𝘁. Near real-time price intelligence and scenario modeling are weapons against price wars. Model pricing impacts and make proactive decisions to protect your brand and bottom line. 3. 𝗠𝗮𝗽 𝘁𝗵𝗲 𝗣𝗿𝗼𝗳𝗶𝘁 𝗣𝗼𝗼𝗹 𝗟𝗮𝗻𝗱𝘀𝗰𝗮𝗽𝗲. It reveals exactly where value is being captured—by you, your distributors, or the retailers. It also helps with renegotiating trade terms. 4. 𝗣𝗿𝗶𝗰𝗲 𝗳𝗼𝗿 𝗩𝗮𝗹𝘂𝗲, 𝗡𝗼𝘁 𝗝𝘂𝘀𝘁 𝗩𝗼𝗹𝘂𝗺𝗲. Price-value mapping aligns your pricing with customer perception and willingness to pay. It's about reinforcing brand equity while maintaining profitability. Stop leaving your pricing to chance. I've created a 𝗖𝗣𝗚 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 & 𝗥𝗚𝗠 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗲 𝗛𝘂𝗯 specifically for mid-market CPG brands. It's packed with practical guides, tools, and frameworks you can use immediately to address the above pain points. The link to access is in the comments.

Most startups play defense when discussing pricing with customers. They dance between asking for too little, leaving money on the table, and asking for too much, only to lose the customer’s interest. The very best companies lead their customers in that dance. They use pricing as an offensive tool to reinforce their product’s value and underscore the company’s core marketing message. For many founding teams, pricing is one of the most difficult and complex decisions for the business. Startups operate in newer markets where pricing standards haven’t been set. In addition, these new markets evolve very quickly, and consequently, so must pricing. But throughout this turmoil, startups must adopt a process to craft a good pricing strategy, and re-evaluate prices periodically, at least once per year. The Three Core Pricing Strategies There are only three pricing strategies startups should pursue: Maximization, Penetration and Skimming. They prioritize revenue growth, market share and profit maximization differently. Maximization (Revenue Growth) - maximize revenue growth in the short term. Startups should pursue maximization when there are no clear differences in customer segments’ willingness to pay, and when the optimal short term and long term prices are equal. Many mid-market software companies price with the goal of revenue maximization, negotiating for the highest possible price in each sale. Penetration (Market Share) - price the product at a low price to win dominant market share. A bottoms-up strategy lends itself to penetration pricing. Price low to minimize adoption friction, grow quickly, and then move up-market after developing broad adoption. Penetration pricing leads to land-and-expand sales tactics. Expensify, Netsuite, New Relic, Slack follow this model. Penetration prioritizes market share. Skimming (Profit Maximization) - start with a high price and systematically broaden the product offering to address more of the customer base at lower prices. Skimming is widespread in consumer hardware. Apple sells the latest iPhones at the highest prices, and repackages older models at lower prices to address different customer segments. As Madhavan Ramanujam tells it, Steve Jobs was both a product genius and pricing genius. By pairing the two skills, he led Apple to record-breaking profits quarter after quarter. Skimming is less common in the software world because few startups develop a product at launch that will be accepted by the most sophisticated customers (and those willing to pay prices that generate the greatest margin). There are exceptions: Oracle’s database, Tanium’s security product, Workday’s human capital management software. Read the full post here : https://lnkd.in/g-mxQiV9

Too many companies set prices arbitrarily. But pricing isn’t just about covering costs—it’s a powerful strategy that drives growth. Here are 6 pricing models and how to make them work for you:   𝟏. 𝐂𝐨𝐬𝐭-𝐩𝐥𝐮𝐬 𝐩𝐫𝐢𝐜𝐢𝐧𝐠 The simplest model. Take your costs, add a margin, and set your price.    But it’s short-sighted.    If you don’t consider what customers are willing to pay, you could be leaving serious money on the table.    𝟐. 𝐂𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐯𝐞 𝐩𝐫𝐢𝐜𝐢𝐧𝐠 Benchmark against your rivals.    If you’re better, charge more.    If you’re scaling fast, go lower—but only if it’s part of a strategy, not a race to the bottom.    𝟑. 𝐏𝐫𝐢𝐜𝐞 𝐬𝐤𝐢𝐦𝐦𝐢𝐧𝐠 Start high, then reduce over time.    Luxury brands and tech companies use this to create exclusivity early on before broadening their market.    𝟒. 𝐏𝐞𝐧𝐞𝐭𝐫𝐚𝐭𝐢𝐨𝐧 𝐩𝐫𝐢𝐜𝐢𝐧𝐠 The opposite of skimming—start low to grab market share, then increase prices later.    But if you train customers to expect discounts, raising prices can be tough.    𝟓. 𝐕𝐚𝐥𝐮𝐞-𝐛𝐚𝐬𝐞𝐝 𝐩𝐫𝐢𝐜𝐢𝐧𝐠 What are people really paying for?    Netflix does this well—offering an ad-free experience and premium features at a higher price.    If your product has added benefits, customers will pay more.    𝟔. 𝐃𝐲𝐧𝐚𝐦𝐢𝐜 𝐩𝐫𝐢𝐜𝐢𝐧𝐠 Used by Uber, airlines, and hotels—pricing shifts based on demand, competition, and availability.    For some businesses, this is the future.    Pricing can make or break your business. A 1-2% price increase can 𝐝𝐨𝐮𝐛𝐥𝐞 𝐩𝐫𝐨𝐟𝐢𝐭𝐬. So if you’re guessing your prices, it’s time to rethink.

📝 Price in FMCG: In Short Price in the FMCG is more than a figure on a label. It is a critical tool that shapes consumer behavior, influences brand perception and determines how much market share to capture. Basically FMCG products are sold in large quantities and usually have low margins due to this a small pricing decision dramatically affect revenue and profitability. 1. 🎯 Objectives: Pricing objectives represent the strategic goals a company aims to achieve when determining the price of its products. It include the key objectives listed down: - Market Penetration: Setting a low price initially that helps to quickly gain market share, attract new customers and discourage competitors from entering the category. - Profit Maximization: Balancing cost and price to deliver optimal profit margins. This often involves premium positioning or targeting less price sensitive segments of a specific segment. - Price Stability: Keeping prices steady to maintain trust with distributors, retailers and consumers. Inconsistent pricing damage brand equity and confuse the market. - Competitive Positioning: Pricing to match or undercut competitors while maintaining value perception. In FMCG, shelf space takes to revolve around competitive pricing. 2. 🛠️ Types of Pricing Strategies in FMCG - Everyday Low Pricing (EDLP): A consistent low price without frequent discounts. This builds trust with price conscious customers. - High Low Pricing:- Keeping regular prices high but using frequent promotions, discounts and coupons to boost short term sales. - Bundle Pricing: Offering multiple products together at a reduced total price to encourage bulk purchase. - Psychological Pricing: Setting prices just below a round number to make them appear cheaper. This is highly effective in FMCG because purchase decisions are quick. - Premium Pricing: Charging more to signal superior quality or exclusivity. It works well for niche FMCG segments such as organic food, luxury personal care products, etc... 3. 🪜The Price Ladder in FMCG: A price ladder allows consumers to trade up or down within the similar or substitute product:- - Entry Pack (Trial Size): Small and affordable to encourage trial by first time buyers. Eg. Mini sachets of powder detergent - Standard Pack: Regular size for everyday purchase; main revenue driver. - Family/Value Pack: Larger size with a lower unit cost to reward loyal buyers & encourage stock ups. Eg. Large refill packs or economy jars. In summary, price in FMCG is not simply a cost plus margin calculation rather it is a powerful strategic leverage that influences trial, repeat purchase, brand loyalty and market share.

Set and forget is not a pricing strategy ! Price--> Design--> Build We know that's what everyone says, but thats an oversimplification of what the entire process should look like. The assumption your pricing was correct in the pre-design phase and doesn't need change is dangerous, dangerous, dangerous !! I have seen too many physical and software products change drastically between initial design to final delivery. Product owners will typically assume that pricing still holds. You have to change that philosophy. In the real world we need a lot more iteration in price: Step 1: Initial Price: This stage you quantify the value and set an initial target price. This is a combination of internal/external research, some value quantification and pricing knowledge. Step 2: Design: With that price info, the product team designs a product that hits product and profitability targets. This is also where you need to keep track of the product margins. Often product will go design a better product at the expense of higher cost, and margins suffer before launch. Step 3: Reprice: Now that we know the new design constraints that impact the profitability, this stage gives you the opportunity to reprice the product based on the design. If substantial value has been added, price should go up. Do not fall into the 'lets over deliver on value and keep price same' trap. Step 4: Build: Now with that new price info and product roadmap the product goes through the build stage. Step 5: Pre launch reprice : Now significant time may have passed since last price review. The market for the product, the economy etc may have changed. This stage can assist in making last changes before product goes out. Good time to also establish guardrails for price performance, discount strategy, or sales strategy. Step 6: Launch: Goes without saying the product is out in the real world. Great way to capture feedback. Also a stage where performance is measured against the price guardrails. Step 7: Reprice 3: Based on sales feedback, you start charting next steps. Selling too slow, you may need discount or reprice. Selling too fast, it may be overdelivering on price vs value. Pricing metric may need change. Fx may have changed. This is the price adjustment stage, should be annual or semi annual. You can incorporate these steps into new product introduction framework or annual or semi annual pricing strategy process, either ways it will help establish good pricing principles in the org. I know of many products that once designed were never repriced years into its life.. Surely things must have changed all those years... Think of Pricing as a lifecycle !! -------------------------- We are in #Pricingtribe.

I noticed a consistent pattern while reviewing product pricing pages: Most brands think customers are evaluating value. They are not! They are trying to avoid making a bad decision. And when you give them only two options, you increase that pressure. Example: Small coffee — $2.50 Large coffee — $4.75 Now the customer is stuck. → “Do I really need the large?” → “Is the small too little?” The gap feels uncomfortable. So they default to the safer, cheaper choice. Not because it’s better. Because it feels less risky. Now watch what happens when you introduce a third option: Small — $2.50 Medium — $3.75 Large — $4.75 The decision changes instantly. No one debates small versus large anymore. They are comparing medium vs large. → “For just a bit more, I get the large.” And suddenly, the higher-priced option feels reasonable. That middle option wasn’t added to sell. It was added to the guide. This is how smart pricing works: → It shifts the comparison → It anchors perception → It reduces decision friction → It nudges customers toward the outcome you want Pricing is rarely about the number. It’s about the context around the number. Most brands optimize for margins. Better brands optimize for decisions. If you are building offers, look at how your choices are structured. That’s where the real leverage is. Save & share this to help your network. Follow Asim Khaliq for more business growth insights.