Pricing Pointers Roundup: April, 2026
A monthly digest of my pricing ideas and observations from Substack Notes
I know you’re busy and it’s easy to overlook a valuable idea in Substack Notes. That’s why I’ve gathered all of my pricing insights from the past month here in their original order. You can catch up in case you missed a tip that could help your business. If you have a moment, let me know your favorite pricing pointer this month!
No sale without cutting your price?
Try this approach.
When a buyer asks for a lower price, offer them a less expensive version of your product or service instead.
When you discount your price, you train your customers to expect a discount every time they do business with you.
Other customers may demand a similar discount when they find out you’ve given someone else a break on price.
By offering different versions at different price points, you’re forcing your customers to trade off price and value.
Is price cutting your only strategy?
Think again.
Many businesses default to discounts when facing competition. However, you have smarter, more profitable options.
There are two major drawbacks to cutting your price. First, it’s hard to raise it later. Second, it cheapens the image of your product.
Remember, price is only one aspect of your offer. You don’t have to cut your price to improve it. Give them more for their money instead.
Increase the quantity, improve the quality, or add a complementary product. Explore faster delivery or more flexible payment plans.
Here are ways to keep your nonprofit’s services accessible while ensuring sustainable revenue.
[1] Pay-What-You-Can
Offer flexibility through pay-what-you-can pricing with a suggested fee. The suggested fee provides an anchor point that typically increases overall revenue.
[2] Sliding Scale Fee
Design your fee structure based on documented ability to pay. This ensures services remain accessible while capturing more revenue from those with greater means.
[3] Tiered Fee Menu
Create a list of options at different fee levels that any user can choose. This allows users to self-select based on their specific needs and financial capacity.
Too many price discounts are just a pay cut for your business.
When you offer a price discount, you are going to lose some revenue from existing customers who now qualify for it.
That’s just a fact of business.
Some of your customers who were happy to pay full price now get to pay a cheaper price.
The key is to gain enough new customers at the lower price to more than offset that lost revenue.
Otherwise, you’re cannibalizing your profits even as you increase your sales volume.
And here’s the part that really hurts: You’re now working harder for less money!
Your costs set the floor, but your customers set the ceiling.
Small business owners often make the mistake of setting prices based solely on a markup of their costs. Strategic pricing requires balancing the “3 C’s”:
Customers: Customer value defines the maximum price a buyer will pay. That value stems from their pains, fears, and desires.
Competitors: What is your product worth compared to the buyer’s best alternative? You can charge a premium only to the degree you deliver more value.
Costs: Your direct, avoidable costs represent the absolute floor below which selling becomes a losing game. As the old joke goes: “We lose money on every sale, but we make it up on volume.”
The Catch: Your value and your competition are defined by your customers, not you.
This makes cost-plus pricing feel safe because it seems like an objective calculation. But if you focus only on costs and ignore the buyer’s value perceptions, you are anchoring your price on the wrong indicator. You’re looking at the one thing your customers don’t care about—your costs.
The key is to find a sweet spot between your cost floor and the value ceiling that makes doing business with you mutually advantageous.
Maybe this will help: You’ve spent plenty of time calculating your costs to deliver. Now, flip the script. Ask yourself, “What is the cost to my customer if they don’t buy from me?”
Lowering your price without lowering your profit
It’s better to take a smaller profit on each sale (maybe) than to sell nothing at all.
However, the trick is to take a smaller profit in only two scenarios: (1) from new customers who wouldn’t have bought at the full price, or (2) on additional items that your existing customers add to their purchase (or purchase history).
If you reduce it for every buyer, the losses from your current buyers may outweigh the gains from those new or additional sales.
The real obstacle is targeting.
You must find a way to offer these price cuts strictly to “incremental” sales without giving a discount to the people already willing to pay full price.
Three blindspots killing your competition-based pricing strategy
It seems easy enough. Study what your competitors charge and charge a little bit less. What could possibly go wrong?
But in practice, matching the market is rarely straightforward. If you’re going to use this approach, don’t overlook these three realities:
[1] Your customers decide who your competitors are, not you. If you’re going to study anyone, you need to study who they were buying from before they found you.
[2] Services are “invisible.” This makes it difficult to compare the scope and quality of a competitor’s services against yours.
[3] Sometimes, the competition is your customer. You aren’t just competing with other businesses; you’re competing with your customer’s ability to do the job themselves when they have the time, skills, and resources.
The Takeaway
If you set your price based solely on what others charge, you’re ignoring the intangible things that win a customer.
P.S. There’s also a giant hidden assumption behind this practice: that your competitors know what the hell they’re doing!
Don’t be afraid of high prices. Be afraid of having only one price.
A single price is an imperfect compromise.
It prices out potentially profitable customers while leaving money on the table.
Specifically, I mean from the customers who prioritize performance and results over paying a lower price.
The key word here is options. If one buyer pays more than another, it’s because they choose to.
And some will choose to if you deliver enough extra value to justify (in their minds) paying more.
Stop fearing a high price tag. Start fearing the opportunities you lose by having only one.
A single, uniform price for every customer is a recipe for stagnant growth.
If you are charging everyone the same price, you are failing to capture a huge portion of the value you’re delivering to the marketplace.
To maximize profit, you must move toward price segmentation and charge closer to what different buyers are actually willing to pay.
A price segmentation strategy is superior to a uniform price strategy, but it requires a “defensive” mindset.
You can’t just set the price for a particular segment and forget it.
You have to build “fences” that protect it.
Which buyers get which price? There are 3 ways to answer this question. I bet you know only 2. Too bad.
[1] The Uniform Approach: You offer every buyer the same exact price, regardless of who they are or how much they purchase.
[2] The Targeted Approach: You select which buyers are offered which price based on differences you perceive in their willingness to pay.
This often takes the form of haggling with buyers or offering discounts based on observable characteristics like age or location.
[3] The Self-Selection Approach: Buyers select which price they’re willing to pay from a menu of options you offer to everyone. If one buyer pays more than another, it’s because they chose a different option. Choice removes the sting of price differences.
Why focus on #3?
This is the approach I write about: why, when, and how to use it.
While many businesses default to the others, I’ve found that approach [3] often falls off the radar. That’s unfortunate because it’s:
More precise than demographic-driven discounts: Instead of using “proxies” like age or location to guess what someone can afford, you let the buyers tell you exactly what they value. It replaces the guesswork of categorization with the clarity of customer choice.
More practical than haggling: This can be an expensive form of selling that’s hard to justify in many selling situations. And it can leave customers feeling like they were taken advantage of if they discover later they paid more than someone else for the same thing.
Frankly speaking, negotiating over price isn’t going to go away. In many purchasing situations it’s sensible, even expected. But lots of stuff has already been written about this topic. Writing about the self-selection approach is where I can add value.
It offers serious advantages to small businesses and nonprofits looking for a strategy that is both scalable and fair.
There are two key buyer questions you must answer.
Every seller has to be prepared to answer these two questions:
Why should I buy X?
Why should I buy X from you?
Knowing a little bit about price strategy can help you successfully navigate these and close more sales. Here is how you answer them:
Question 1: Why should I purchase X?
The Answer: Value > Price. The buyer needs to see that the value they will receive is greater than the price they have to pay. Value gained must be greater than value given up to ensure the trade is profitable to them. (Yes, that’s right. Customers must “make a profit” too. They just don’t record it in their accounts.)
Question 2: Why should I purchase X from you?
The Answer: Value difference > Price difference. This is about your “differentiation value.” You must show the additional value they get from your specific offering over and above their best alternative.
Even if you are the lower-priced alternative, the same logic applies: you must prove that the money they save by buying from you is greater than the value they might lose by “downgrading” to your version.
Master these two formulas, and you master the sale.
Most small businesses leave money on the table because they don’t understand how their products “talk” to each other.
There are 3 product relationships, but only 2 can boost your sales and profits.
The first category is complements.
Complements are products or services that are purchased and/or used together. If an increase in the sales of product A leads to an increase in the sales of product B, then A and B are complements.
For the buyer, the question is “Do I want both A and B?” Knowing that two products or services are complements tells you that there are cross-selling opportunities. (“Would you like to add a printer to your laptop purchase?”)
The second category is substitutes.
Substitutes are products or services that are used in place of one another. If an increase in the sales of product A leads to a decrease in the sales of product B, then A and B are substitutes.
For the buyer, the question is “Do I want either A or B?” Knowing that two products are substitutes tells you there are potentialup-selling opportunities. (“Would you like to upgrade your laptop purchase to a bigger screen?”) I say “potential” because the substitute must be perceived as being a better option, not just different.
The third category?
Independent products. These are items that have zero effect on each other’s sales.
Since they don’t drive strategic growth, I’m ignoring them today. (“Would you like to add a snowblower to your laptop purchase?” Or, “Wouldn’t you rather purchase a sailboat instead of the laptop? We have the newest models on display.”)
Logic will often tell you how two products are related. But ultimately, buyers determine which products are complements and substitutes by their behavior.
In short: if you want to unlock more revenue, identify complements you can cross-sell alongside your core product or service, or substitutes you can up-sell in its place.
Is the budget option on your price menu too good?
By making your lowest-priced option too good, you are effectively cannibalizing sales of your premium tier.
Your most profitable customers look at your menu of options and realize they can get 90% of the results for 50% of the price.
The jump in price to your premium tier must come with an even bigger jump in value to the buyer (as they perceive it).
When was the last time you audited the “value gap” between your pricing tiers?
Is your pricing model accidentally driving customers away?
Many businesses lose sales by being too rigid in their pricing. They fall into the trap of thinking they must sell everything separately or as a single, “take-it-or-leave-it” package.
They don’t realize there’s a middle ground called mixed bundling. It allows buyers to purchase products individually or as a package, giving them the flexibility to choose based on their specific budget and needs.
Because customers don’t feel backed into a corner, they are often more open to the higher-value option. This encourages more spending without forcing a purchase. The price difference between the individual items and the package (the bundle discount) is the incentive to upgrade their purchase to the bundle.
Read my article for tips on how to calculate your own bundle discount.
Your customers don’t care about your costs
Your customers don’t care about your rent, your payroll, or your overhead. They only care about one thing: the impact you have on their business or life.
Many businesses fall into the “cost-plus” trap. They calculate their expenses and add a mark-up to arrive at their price.
While this seems like a logical approach, it’s completely disconnected from why people actually buy.
When you “overpaid” for that beverage you bought when you were on vacation, you didn’t calculate the seller’s cost. You thought about your thirst and the convenience of having a cold drink delivered right to your beach chair. You bought the result, not the overhead.
Pricing based on your costs caps your success. It ignores the actual value you create in the market.
To grow profits, you must shift your thinking. Stop focusing on what it costs you to provide the service and start focusing on what it is worth to the person receiving it.