Dynamic Pricing in Sales

Pricing shouldn’t feel like a fight. It should feel like a fair conversation between adults who both want the relationship to last. When costs keep rising and margins start to feel thin, the worst thing we can do is spring a surprise increase and hope customers accept it. The better path is to make small, evidence-based adjustments that people can understand, and to do it with enough notice that trust grows rather than erodes. Here’s how I guide teams through it... We set a simple rule first: price reviews happen on a predictable cadence, anchored to a sensible index, and capped so there are no surprises. Then we give customers a choice. A clear Good / Better / Best set of tiers lets people pick the value that fits, and it means we stop discounting just to “make it work.” For loyal customers, we start with a grace period and then move in small, scheduled steps. It’s respectful, and it smooths cash flow for everyone. We also swap blanket discounts for an early-pay credit that protects the list price while bringing cash forward. We add a few fair boundaries so small, urgent, or high-touch work is priced to match the effort. Where costs have increased in one part of the service, we re-bundle so value is obvious and buyers are never misled. And when it’s time to talk, we keep the message short and human: here’s what changed in our input costs, here’s the adjustment we’re making, and here’s what stays the same in terms of quality and scope. If you track a few signals for 30 days, you’ll see better results like: most eligible accounts receive the scheduled uplift, the overall discount rate falls, more invoices are paid early, average revenue per customer increases, and churn and NPS hold steady. The goal is pricing that is predictable, and defensible. Think caliper, not hammer, with measured moves that protect margin and maintain customer goodwill. How do you explain price changes to customers without losing trust? ------- ➕ Follow Jonathan Maharaj FCPA for finance‑leadership clarity. 🔄 Share this insight with a decision‑maker. 📰 Get deeper breakdowns in Financial Freedom, my free newsletter: https://lnkd.in/gYHdNYzj 📆 Ready to work together? Book your Clarity Session: https://lnkd.in/gyiqCWV2

Southwest Airlines just initiated $35 checked bag fees, ending their trademarked "bags fly free" promise. Customers never love price increases, but for Southwest the reality is much worse. From a customer psychology perspective, this is more than a modest pricing change. The new fees will trigger multiple cognitive biases that drive customer defection. Customers don't see this as Southwest adding a $35 service. They see it as Southwest TAKING AWAY something they already owned. Loss aversion research shows this psychological pain is 2-3x stronger than equivalent gains. Expect vocal complaints and defection, especially from frequent flyers who built "free bags" into their mental accounting. Southwest built their entire identity on "bags fly free"—they literally TRADEMARKED it. This dramatic reversal triggers massive cognitive dissonance. When a company violates their core brand promise, customers don't just question the bags policy. They wonder what other promises might be broken next. Here's the killer: customers are anchored to Southwest as the "low-cost, customer-friendly" option. That $35 fee doesn't feel like a reasonable airline charge. It feels like highway robbery because it's compared against an anchor of $0, not competitors' similar fees. Southwest's CFO said they were "out of sync with competitors' bare-bones fare options." But he's missing the psychology: Southwest customers didn't choose them to be like everyone else. They chose them to be DIFFERENT. The paradox? By trying to optimize revenue per passenger, they're likely to trigger the exact behaviors that reduce total revenue: customer defection, negative word-of-mouth, and brand switching. This reminds me of Netflix's Qwikster disaster or New Coke's reformulation. Sometimes the financial logic is sound, but the customer psychology is catastrophic. The real question: Will Southwest's revenue optimization overcome the psychological costs of breaking a 50-year brand promise? What's your experience with companies that violated core brand promises - did the psychological damage outweigh the financial benefits? #BehavioralEconomics #CustomerPsychology #BrandStrategy #Neuromarketing

You're afraid to raise your prices because you think you'll lose clients. Here's the counterintuitive truth: You might lose some clients, and that's actually strategic. I worked with a professional speaker who raised her minimum speaking fee. She lost 25% of her revenue initially. But here's what happened next. That same price increase saved her 40% of her time by eliminating lower-paying engagements below her new threshold. What did she do with those reclaimed hours? She wrote a book proposal. She developed a signature workshop series. She built relationships with higher-tier event planners. Within 18 months, her revenue was 30% higher than before the price increase. The best clients who truly value your work will stick with you. The ones who leave either can't afford your current level of expertise or weren't aligned with where you're heading anyway. Here's the practical strategy that makes this work: Give existing clients 6-12 months advance notice of your price increase. Grandfather them in at current rates until that date. Why this timeline works: Six months gives them enough time to budget for the change without feeling blindsided. It preserves your current relationship while you're building new work. And it positions the increase as inevitable growth, not a sudden cash grab. The real insight? This isn't just about raising prices. It's about strategically choosing which clients you keep as you level up your business. 🛟 Save this post if you're ready to get paid what you're actually worth. ➡️ Follow Dorie Clark for more strategies on building a business that values your expertise.

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.

As VP Sales, I helped Syte go from $1M-10M ARR in 24 months. Here are the 5 changes we made to our enterprise sales playbook to 3x ACV to $150K: 1. Product Positioning/Pricing Shift Your product CANNOT be priced 3x more in the same market—not unless it's positioned differently. So I decided to roll up my sleeves, take calls, and experiment with positioning our multi-products as a suite with a single pricing model. The result? Not only did that lead to bigger deals, but customers started seeing us as a more strategic partner. Don’t look at biz models as just tactics—they play a big role in how you’re perceived. 2. From 'Selling Products' To ’Transformations' 'Selling a product' means you’re focused on product-level pain (e.g. Hidden stakeholders in deals). 'Selling a transformation' means you're focused on your prospects' key priorities (e.g. Ensuring GTM effectively moves up-market ahead of next fundraising). Of course, both levels matter, but the question is... Is your champion telling a 5, 6, or 7-fig ACV story? 3. Coached SEs To Build Advanced ROI Our e-commerce buyers lived and breathed data—if we couldn’t talk their numbers game, we’d lose. We also needed to prove the money they were bleeding by not fixing the problem. Our AEs initially struggled to hit CFO-level standards, so we pulled in our Head of Analytics and built a playbook on articulating ROI. Once our SEs learned it, they could walk a CFO through real-world math in minutes. That credibility was a game-changer for large deals. 4. Tripled The Steps Of Our POC Playbook Our tech was mind-blowing in live demos, and we knew that’s where we’d outshine competitors—if done right. But a chaotic POC can do more harm than good. So we reworked the entire playbook: No Mutual Action Plan? No POC. Every AE was required to run a kickoff call defining scope, success criteria, resources, and—ideally—exec-level commitment. Slowing things down up front led to faster, more decisive closes later. 5. Made ‘Challenger Sales’ Our Go-To This was a highly complex motion. We had to sell against an ‘easy’ status quo. AEs who were only teaching about our product couldn’t create a compelling case for 6–7fig funding. We decided: every rep must adopt a Challenger mindset—teach buyers about problems they didn’t know they had, offer a brand new perspective about how to solve them, and reframe the solution. That consistency kicked open bigger budgets and higher ACVs across the team. —— Being a startup sales leader is hard. It sometimes feels impossible. But that’s why you shouldn’t play it safe. Take the bold bets. Run risky experiments. Challenge assumptions. Get comfortable being uncomfortable. That’s where the magic happens. P.S. We built Aligned to help manage the deal complexity of Enterprise Sales. A 100% FREE Deal Room used by 30,000 sellers. Try it here: https://lnkd.in/d_49kHZE

𝗛𝗼𝘄 𝘁𝗼 𝗱𝗲𝘁𝗲𝗿𝗺𝗶𝗻𝗲 𝗣𝗿𝗼𝗱𝘂𝗰𝘁 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆 (𝗪𝗶𝘁𝗵𝗼𝘂𝘁 𝘁𝗵𝗲 𝗴𝘂𝗲𝘀𝘀𝘄𝗼𝗿𝗸) When it comes to deciding product’s pricing strategies, most of the PMs have 2 approaches: → Guessing work → Get overwhelmed by over 25 pricing strategies available in the market It makes the hard thing (pricing) even harder to decide and execute. But let me share a simple 3 step framework that would work for almost all the product pricing strategies. 1. 𝗖𝗼𝗹𝗹𝗲𝗰𝘁 𝗮𝗻𝗱 𝗮𝗻𝗮𝗹𝘆𝘇𝗲 𝗱𝗮𝘁𝗮 - The first step is to dive into the data. - Study competitor pricing, identify key profit margins, and identify customer segments that are most profitable for you at the current stage. - Look for insights that reveal how your product is perceived in the market. 👉 For instance, when Swiggy ventured into subscription models, it experimented with its Swiggy Super plan. By analyzing customer data, it found that users preferred free delivery perks. This insight allowed them to create a pricing model that not only increased subscriptions but also improved overall order volumes. ✅ So, pricing should always be a dynamic process. Don’t rely on a “set and forget” approach. Continuously engage with your pricing team and adjust based on market shifts and customer behavior. 2. 𝗙𝗼𝗰𝘂𝘀 𝗼𝗻 𝗰𝘂𝘀𝘁𝗼𝗺𝗲𝗿 𝘃𝗮𝗹𝘂𝗲 - Don’t focus solely on maximizing profits or sales volumes, think about the value your product delivers. Consumers today are willing to pay a premium for products they feel add significant value. 👉 Consider Tata Nexon EV, one of India's leading electric vehicles. Despite higher upfront costs compared to traditional fuel cars, it offers long-term savings and environmental benefits, which customers perceive as valuable and they are buying it. ✅ As a product manager, your job is to understand what drives consumer decision-making. Are they paying for premium features, better service, or convenience? The more you emphasize value, the stronger your pricing strategy will be. 3. 𝗗𝗲𝘃𝗲𝗹𝗼𝗽 𝗼𝗽𝘁𝗶𝗼𝗻𝗮𝗹 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 𝗺𝗼𝗱𝗲𝗹𝘀 - Once you understand your costs and customer segments, develop three pricing strategies - conservative, aggressive, and a middle ground. - Think of it as a Goldilocks approach: one option may be too extreme, another too safe, but the third might hit the sweet spot. - This gives your business a range of options to test and optimize. 👉 Take Netflix India as an example. When it introduced the low-cost mobile-only plan, it allowed the company to penetrate deeper into the price-sensitive Indian market. By offering different pricing tiers, Netflix was able to serve both premium and budget-conscious users. 𝗜𝗻 𝗮 𝗻𝘂𝘁𝘀𝗵𝗲𝗹𝗹: Pricing is all about understanding what your customers are willing to invest in terms of time, energy, and money. What's your go-to strategy for product pricing?

Inflation often forces businesses into a dilemma—raise prices and risk losing customers, or keep prices stable and shrink margins. But what if data could help strike the perfect balance? 🚀 Challenge: Flipkart, one of India’s largest e-commerce platforms, noticed fluctuating customer retention rates and declining repeat purchases, especially during inflationary periods. Traditional deep-discount campaigns led to short-term sales spikes but failed to build long-term customer loyalty. 🔎 Solution: Data-Driven Discounting Strategy Flipkart’s analytics team uncovered a key insight: Small, frequent discounts (e.g., 5-10% on repeat purchases) led to higher engagement. Personalized offers based on purchase history encouraged repeat buys. A/B testing revealed that customers preferred consistency over occasional deep discounts. 💡 Implementation: Using AI-driven dynamic pricing, Flipkart rolled out: ✅ Tiered discounts for loyal customers. ✅ AI-powered coupon recommendations. ✅ Targeted email campaigns promoting small, time-sensitive discounts. 📈 Results: After three months of testing, Flipkart saw: ✔️ 17% increase in repeat purchases ✔️ 12% uplift in customer retention ✔️ Higher profit margins vs. deep discounting 🎯 Key Takeaway: In an inflationary environment, data-driven pricing isn't just about maximizing revenue—it’s about customer psychology. Businesses that personalize their offers and optimize discounts intelligently can boost retention while protecting margins. 𝑾𝒉𝒂𝒕 𝒑𝒓𝒊𝒄𝒊𝒏𝒈 𝒔𝒕𝒓𝒂𝒕𝒆𝒈𝒊𝒆𝒔 𝒉𝒂𝒗𝒆 𝒘𝒐𝒓𝒌𝒆𝒅 𝒇𝒐𝒓 𝒚𝒐𝒖𝒓 𝒃𝒖𝒔𝒊𝒏𝒆𝒔𝒔 𝒊𝒏 𝒄𝒉𝒂𝒍𝒍𝒆𝒏𝒈𝒊𝒏𝒈 𝒕𝒊𝒎𝒆𝒔? #datadrivendecisionmaking #DataAnalytics #DiscountStrategy #BusinessStrategies

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

The Brand Citizenship Tax is infuriating. I tried to cancel my Masterclass subscription last year, and they quickly offered me 50% off to stay. For a second, I felt like a valued customer, until I realised what that actually meant. If I'd stayed loyal and paid on time all along, I'd be paying double what someone who threatens to leave pays. The person who sticks around subsidizes the person who complains. I call it the brand citizenship tax. And it’s infuriating. This pattern shows up everywhere once you start looking. Xfinity, one of America's largest broadband providers, charges loyal customers over $100/month for 1GB internet while new customers get the same speed for $50 with a five-year price lock. The UK's financial regulator found that 6 million loyal home and car insurance customers overpaid £1.2 billion in 2018 alone. In Australia, the Big Four banks collectively extract $4.5 billion annually from existing mortgage holders who don't renegotiate. The economics make sense if you think about it from the company's side. Growth-stage brands live by acquisition metrics, and competition drives introductory discounts because firms know that once they win a customer, they can charge more later. That process continues until the discount exhausts all future profit from the loyal base. So you end up with an inverted system: stay longer, pay more. Threaten to leave, and get the deal you should have had all along. Meanwhile, these same brands build retention teams, preach customer lifetime value, and hire consultants to reduce churn. Their pricing does the opposite of everything they claim to want. The quiet customer who pays full price every month is keeping the lights on and getting treated the worst for it. When you're loyal and watch new users get 50% off, you feel robbed. As simple as that. Additionally, the damage compounds. Loyal customers who realise they're being taxed don't just churn. They stay and resent. They post on forums, warn friends, and stew constantly. That's corrosive. So what should brands do? Three things: First, audit whether you're taxing loyalty. Compare what long-term customers pay versus new ones. If you have a gap of over 10-15%, you've got a problem. Second, stop hiding behind "promotional pricing." Ask whether short-term acquisition gain is worth long-term trust erosion. Third, look at models that work. Australian mortgage platform Athena implemented automatic rate-matching. Loyal customers never get worse rates than new ones. Transparent pricing beats clever pricing.

Consumers are so value-seeking they are willing to accept & do things that would've been unimaginable 2-3 years ago. One of the most destructive arms races in ecommerce was the rise of free shipping & free returns. This is a huge financial & logistical burden, but merchants felt they had to offer it in the pandemic ecomm boom to stay competitive. But fast forward to today and consumers are much more willing to change behavior to save cash, including accepting slow delivery. Speed of delivery has fallen from the #1 preference driver in 2022 to #5, with cost taking the top spot. This story extends beyond shipping. Consumers are pinched, and they’re doing all kinds of things to save. That includes: → Holding Off → Trading Down → Stocking Up → Hunting for Deals The tricky bit for businesses is how to meet that expectation for value without aggressive discounting (which risks cannibalizing revenue, conditioning customers to expect more deals, and tarnishing the brand). The winning playbook comes down to thoughtful, transparent value exchange. Letting consumers choose a cheaper & slower option (or framing it as a discount, like Amazon often does) is one form of that transparency. Ultimately, the best way to structure transparent value is a good loyalty program. Through loyalty, customers can take a wide range of actions (both transactional & non-transactional) to earn future value. And valuable perks like shipping & returns can be given out more strategically, or even unlocked as one-time rewards instead of an evergreen promise. Times are tough, and spend is tight. But loyalty can & should be a primary way to change behavior, deliver value, and steer your business based on changing market signals. If your program isn’t meeting the moment, we at Talon.One are here to help…