Start Mastering the Art of the Price Range
Pricing Pointers, Issue #46
Most businesses leave significant money on the table by assuming their prices must be set in stone. The reality is that value is never a fixed number; it is a fluid perception that changes based on who is buying and when they are buying it. To maximize both your impact and your bottom line, you must stop looking for one “right” price and start mastering the art of the price range.
What follows is a curated collection of my past LinkedIn posts (similar to Substack notes), purposefully selected and sequenced for this issue of Pricing Pointers. Together, they offer a roadmap for moving away from thinking of price as a single number to thinking of price as a flexible range of numbers.
1️⃣ Still charging everyone the same price?
You might be leaving significant money on the table, and it’s all tied to a common pricing myth. The myth is that charging a single, uniform price maximizes sales and profits.
In reality, the value of any product or service is subjective. This means buyers differ in their willingness-to-pay for the same product or service. Charging everyone the same price sacrifices potential profits from those who’d pay more, as well as others who’d pay less but still cover your costs.
If you want to increase your sales and profits, stop searching for the best price. Instead, search for the best range of prices.
2️⃣ The most overlooked fact in pricing?
Buyers don’t care about your costs... not really. They care about the value your product or service provides, and focusing on costs can lead to over- or underpricing that leaves money on the table.
Instead, price for the value you create for your customer. A good bonus tip is to price for the value you create for your customer over and above their best alternative. (Side note: The fancy-smancy term for this is differential value.)
Don’t know what their best alternative is? Then substitute whatever they are using or doing now.
3️⃣ Your single price approach may be costing you a fortune
The truth is the value of many products and services varies based on when they are purchased and/or used. By strategically varying prices to offer desirable times at a premium, or less desirable times at a discount, you can segment buyers by their willingness to pay.
This approach allows you to capture more revenue from those who value convenience and provide affordable alternatives to budget-conscious buyers.
4️⃣ Over-capacity at 3 pm? Under-capacity at 10 am?
Don’t build new capacity; try this first. When demand surges at specific times, your quickest and cheapest fix is to use time-dependent pricing to nudge buyers.
For example, if everyone wants your service in July, raise the rate for July. Then, frame your April rate as an opportunity to save money. This shifts excess demand to underutilized times, boosting your overall profit without the cost of new infrastructure.
5️⃣ Many businesses miss this crucial pricing secret
The value of your product or service isn’t fixed; it’s subjective and contextual. It depends on who you ask as well as when and where you ask.
Imagine capturing more revenue from your most eager customers while still offering affordable options to others. Time-dependent pricing allows you to segment buyers by their willingness to pay for convenience.
You can shift demand to off-peak times or let price-sensitive buyers wait for a deal. You can even reserve a lower price for buyers willing to spend their time to get a better deal.
The Bottom Line
Stop searching for the perfect price and start building a price range that meets your customers where they actually are. Capitalize on the specific timing and context that drive a buyer’s decision to say “yes.” Moving beyond a “one-size-fits-all” pricing approach is the most effective lever you have for increasing your sales and profits.