Dynamic Pricing in Sales

"Is $20/month too much for our product?" Instead of guessing, we used the Van Westendorp method to find our pricing sweet spot. 4 questions revealed exactly what users would pay (and we haven't touched our pricing since). Here's the framework any founder can steal: 1. Send a survey to actual users, not prospects We surveyed people already using Gamma. They understood the real value of our product, not hypothetical value. Too many founders survey their waitlist or randomly select people who have never used their product. That's like asking someone who's never driven about car prices. 2. Ask these 4 specific questions - At what price would this be too expensive for you to consider it? - At what price is it expensive but still delivering value? - At what price does it feel like a bargain? - At what price is it so cheap you'd question if it's reliable? These create bookends for perceived value. You're mapping the entire spectrum of price psychology, not just asking "what would you pay?" 3. Plot the responses and find where the lines intersect Graph responses from lots of users. Where "too expensive" and "too cheap" lines cross: that's your acceptable range. Where "expensive but fair" meets "bargain": this is your optimal price point. 4. Test within the range, don't just pick the middle The intersection gives you a range, not a number. We ran pricing experiments within that range to see actual conversion rates. A survey shows willingness to pay; testing reveals actual behavior. 5. Lean towards generous (especially for product-led growth) We chose to be more generous with AI usage than our "optimal" price suggested. Word-of-mouth growth matters more than maximizing initial revenue. Not everything shows up in the numbers. 6. Lock it in and stop tinkering Once you find the sweet spot through data, stick with it. We haven't changed pricing in 2 years. Every month debating pricing is a month not improving product. Remember: pricing is a signal, not just a number (Image: First Principles)

Hourly electricity pricing is over in a month 😮 But that’s a good thing. Starting October 1, all electricity markets will be per 15 minutes instead of per hour. Why? Because the power system is a physical machine that works in real time. Until now, we’ve aggregated consumption in one-hour blocks. This is a simplification. That simplification creates challenges for the grid: market schedules and system operations don’t fully sync. The shift to 15-minute granularity fixes part of that: ✅ Better system alignment: Market schedules match grid reality better ✅ Fewer imbalances: Less cost to correct imbalances ✅ Smoother renewable integration: Easier to handle wind and solar swings ✅ Sharper price signals: Clearer scarcity and flexibility value The illustration below shows this. A 15-min aggregation follows the actual consumption much better than the one-hour alternative. When physics and economics clash. Physics always wins. This is an important step toward aligning power markets with the physical realities of the energy system. But it will change how we consume, trade, and plan energy. So better use the next month to prepare wisely ⚡

It was reported that Delta is piloting AI that sets ticket prices not by route, class or segment, but by calculating how much YOU personally are willing to pay. The system, developed by Fetcherr, analyzes your digital footprint, real-time behavior, and inferred urgency to extract maximum value from your specific situation. Note that this isn't dynamic pricing. It's psychological exploitation. Considerations: ➕ It is emotional exploitation preying on your context, like last-minute grief trips, surprise business needs, and family emergencies. The approach targets vulnerability, not value. ➕ It uses invasive surveillance by analyzing browsing history, loyalty data, location patterns, and urgency signals, AI is essentially "hacking your life" to determine your breaking point. ➕ Amplifies inequality, as research has shown AI pricing models often advantage those with higher incomes while penalizing those with fewer options. That's not personalization; it's predatory. ➕ Trust erosion happens when prices are tailored to your financial threshold and fair commerce ceases to exist. While transparent pricing builds trust, we’ve seen opaque algorithms destroy it. ➕ Takes advantage of regulatory gaps even while claiming compliance. AI's reliance on personal data and black-box decision-making exists in a legal gray zone that warrants overdue oversight. However, we’re seeing just the opposite at the Federal level with AI safety rollbacks this year. The conversation at Delta shouldn't be whether AI can optimize pricing for operational efficiency; that's proven. The real question leadership should answer is whether they're willing to cross the line from business optimization to psychological manipulation for profit. #ethicalaimarketing #responsibleai #leadership #businessethics #consumerrights

Fascinating paper from researchers at Pandora that explores how revenue can be optimized across subscriptions and advertising by personalizing ad load. While personalized pricing for digital products is a well-explored topic, the optimization of "implicit prices" like ad load is relatively fertile ground for research. This paper explores how a firm that monetizes with both ads and subscriptions can utilize ad load as a mechanism for maximizing revenue. The paper's authors conduct a large-scale field experiment in which 7MM Pandora users are separated into seven experimental conditions based on "pods" of ad load: FxL, or number of ad breaks per hour * number of ads per break (eg., 3x2, or 3 ad breaks per hour comprised of 2 ads each). Note that these levels of ad load only reflect *intended* ad load, and not realized, since Pandora can't control whether any given impression is filled. The paper's authors then implement a set of neural-network-based structural models, trained on the variation revealed through the experiment, to test how different users respond to the varying levels of ad load. This personalization policy: 1) estimates individual-level counterfactual subscription uplift 2) estimates individual-level ad-revenue uplift and 3) assigns heavier loads to users for whom the predicted subscription uplift outweighs the loss in ad-supported listening and ad revenue. The paper finds that, while increased ad load is associated with decreased ad-supported listening hours, the personalization strategy is associated with a 7% increase in subscription profits while ad revenue remains constant. This is associated with a roughly 2% decline in consumer welfare, disproportionately felt by users with a high willingness to pay. The authors determine that achieving this same revenue result without a personalization policy would require a roughly 22% increase in universal ad load. Note that the authors highlight one limitation of this approach: impressions remain roughly fixed in the immediate term, so personalizing ad load in this way merely shifts impressions across users, holding the total number of ads served fixed. Link to paper below

I have spent years in the highs and lows of the consumer goods industry but never seen a pricing climate quite like this. Manufacturers are getting squeezed from every direction-tariffs, skyrocketing raw material costs, and relentless supply chain disruptions. The old playbook of raising prices to cover costs? That’s dead. Why? Because consumers are feeling the pressure too. A 2024 Nielsen report makes it clear: today’s shoppers are scrutinizing every dollar they spend, and brands that aren’t strategic about pricing risk losing market share fast. Here’s what I’m seeing from top CPG brands that get it: 1️⃣ Walmart is investing heavily in AI-driven pricing models to keep costs competitive-e-commerce now makes up 18% of total revenue. 2️⃣ PepsiCo is doubling down on pack-size innovation, offering smaller, affordable options to maintain volume without excessive discounting. 3️⃣ Luxury brands are using price elasticity models, testing demand thresholds before rolling out increases-avoiding consumer pushback. 4️⃣ Supply chain resilience is non-negotiable. Companies are shifting manufacturing away from China, despite short-term cost spikes, to avoid future geopolitical risks. The smartest brands aren’t just reacting. They’re rethinking. They’re moving toward Revenue Growth Management (RGM) frameworks that help them: ✅ Optimize pricing and promotions (because blanket price hikes are a losing game) ✅ Focus on margin-smart growth, not just revenue ✅ Leverage data analytics to make smarter, faster pricing decisions Brands that don’t evolve risk eroding profitability or pricing themselves out of the market. CPG leaders who master strategic pricing, operational efficiency, and consumer-driven value creation will own the future of this industry. Are you adjusting your strategy, or just reacting to rising costs? Because in 2025, only the most adaptable brands will win. #CPG #FMCG #PricingStrategy #RevenueGrowth #ConsumerGoods

"Just send the DocuSign to the CFO. We're good to go." Famous last words. 5 days later: "We can't reach this commitment level." Translation: We want half the price. And your champion? On vacation for two weeks. Sigh. You're losing deals because you're SELLING to champions instead of TEACHING them how to sell. After coaching hundreds of reps who get blindsided by last-minute pricing pressure, I've identified the #1 mistake in complex deals with multiple stakeholders: → Assuming your champion knows how to sell internally. When your champion walks into the CFO's office, here's what they actually say: "Hey, we want to spend $250K on this new thing. It's really good. Can we do it?" CFO's response: "What? Why? That's way too expensive." Game over. Think about it: Your champion has NEVER been trained in sales. They don't know how to build urgency, handle objections, or create business cases. Yet we hand them our pricing and expect them to close the CFO. It's like giving a scalpel to someone who's never been to medical school and expecting perfect surgery. This is why I teach reps to ask these questions BEFORE sending any negotiated pricing especially if they are not able to negotiate directly with the Economic Buyer: "If I go to bat for you and get this approved, will you move forward?" "Do you see any reason the CFO would push back on this?" "How can we make sure your CFO is 100% on board before I go beg for this pricing?" If they hesitate on ANY of these questions, you MUST find a way to involve the economic buyer directly or you’ll lose the deal. The hardest territory to manage is the one between your ears. When you change your mindset from "My champion will handle the CFO" to "I need to make my champion bulletproof," you'll stop getting blindsided by pricing objections. Remember: CFOs don't kill deals because of price. They kill deals because of lack of context. Your job isn't to sell to your champion. Your job is to turn your champion into a sales weapon. Sales leaders: Start role-playing these conversations with your team. Have them practice getting economic buyer involvement BEFORE pricing discussions. The reps who master this skill will stop losing deals to last minute CFO objections. — Become the top 1% performer your competition fears. Book your call now to get the EXACT blueprint elite reps use to crush their quotas. https://lnkd.in/gr9u5Vgd (Sales Leaders…. DM me if you want to install this in your teams)

For years, consumers have faced frustration when purchasing tickets to live events. Hidden service fees, venue charges, and other “junk fees” often inflate the final cost, making it difficult to compare prices and budget effectively. In fact, the Council of Economic Advisers estimate that event ticketing junk fees cost consumers a staggering $7.14 billion in 2023 alone. In response, the FTC has introduced the Trade Regulation Rule on Unfair or Deceptive Fees. This rule is designed to increase transparency in ticket pricing by eliminating “bait-and-switch” tactics and mandating upfront disclosure of the true cost of live-event tickets. With the FTC set to begin enforcement 120 days after publication in the Federal Register, here’s what concert venues, ticketing platforms, and music promoters need to know to stay compliant: 1. The Total Price Must Be Disclosed Upfront: The rule mandates that ticket sellers—whether primary platforms like Ticketmaster and AXS, or resale marketplaces like StubHub and SeatGeek—must display the total price of a ticket upfront. This total price includes the base cost plus all mandatory fees, such as service charges, venue fees, and processing costs. Importantly, the total price must be more prominent than any partial or base price. For example, if a ticket costs $50 but includes $15 in mandatory fees, it must be advertised as $65 total from the start of the purchasing process. This provision directly targets drip pricing, where fees are progressively added during checkout, a practice the FTC has identified as deceptive and harmful to consumers. Compliance will require updates to systems and user interfaces to ensure total costs are displayed clearly and prominently, replacing the practice of advertising artificially low base prices. Failure to comply could result in significant civil penalties under the FTC Act, with steep fines for each violation. 2. Misleading Fee Descriptions Are Prohibited: The rule also bans misleading fee descriptions that can confuse or mislead consumers about the nature or purpose of charges. The FTC now explicitly prohibits vague or deceptive terms like “service fee,” “convenience fee,” or “processing charge” unless they are clearly explained and accurately reflect their purpose. The concert industry must be transparent about the services tied to these fees and cannot mislabel operational costs as “government charges” or taxes unless they are directly mandated by law. This provision also distinguishes between mandatory fees—which must be included in the upfront total price—and optional fees, such as add-ons or upgrades, which can be displayed separately but must still be clearly disclosed before purchase. For example, fees described as “facility charges” or “venue maintenance” must genuinely reflect venue-related expenses. Any inconsistency between the name of a fee and its actual use could be considered deceptive and trigger regulatory scrutiny.

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

𝗛𝗼𝘄 𝘁𝗼 𝗱𝗲𝘁𝗲𝗿𝗺𝗶𝗻𝗲 𝗣𝗿𝗼𝗱𝘂𝗰𝘁 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆 (𝗪𝗶𝘁𝗵𝗼𝘂𝘁 𝘁���𝗲 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?

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.