3 Common Pricing Mistakes Businesses Make (and How to Fix Them)
Let’s Be Honest- Pricing is hard.
A simple Google search on the topic will deliver hundreds of articles, expert recommendations, and “sure-fire” frameworks promising to fix your pricing mistakes. Yet, for many business owners and marketers, pricing continues to feel like a mysterious art form rather than a science.
And truthfully—it is both.
Effective pricing requires a unique blend of quantitative analysis, strategic thinking, and creative intuition. It’s a discipline that takes time and experience to master, regardless of your industry.
In this article, I’ll share three of the most common pricing mistakes businesses make and—more importantly—how to fix them.
But before we dive in, I want to make a few commitments:
No theory without practice. Everything I share here is grounded in real-world experience from my years managing roadmap and deal pricing at Intel Corporation and consulting on pricing strategy.
Practical solutions only. The recommendations you’ll find here are not academic hypotheticals—they’re proven practices I’ve seen succeed firsthand, either through my own work or that of my peers.
Why does this matter?
While much of the pricing literature out there is valuable and based in sound academic theory, I have found that few pieces are written by practitioners who’ve actually owned a pricing P&L—where every decision carries real financial consequences. It’s only when you’ve faced a blank pricing sheet, contended with conflicting stakeholder demands, and felt the burden of millions of dollars at stake that you grasp the true weight of making a final pricing call.
My goal is simple:
To help you feel confident that there are frameworks and methodologies you can apply right now to demystify pricing and avoid common pitfalls—even if you’re not a pricing expert, or if you’ve been managing pricing for years and feel stuck in your current process or methodology.
Let’s get started.
Mistake #1: The Legacy Mindset
In established businesses—whether you’re selling cars, computer chips, or cola—it’s common to rely on what worked yesterday. After all, if a strategy drove success in the past, why not continue with the same strategy in the future?
But when it comes to pricing, “what worked before” is often a trap.
Relying on legacy pricing models guarantees you’ll eventually leave money on the table.
Why? Because markets evolve, customers change, and value perceptions shift. A methodology that once seemed rigorous can quickly become outdated if you’re simply “turning the crank” year after year, or even quarter after quarter without questioning your underlying market assumptions.
If you’re not actively measuring how your target audience perceives the value of your product or service today, you risk two outcomes:
Missing opportunities to capture higher willingness-to-pay
Getting blindsided by insurgent competitors with disruptive price/value positioning
The Fix:
Benchmark your prices regularly. At least once per pricing cycle, analyze how your offering stacks up against competitors. Consider using tools like Price Intelligently or ProfitWell to automate this where possible.
Listen to your customers. Conducted regular surveys, interviews, and informal reviews to gauge perceptions of value. Are customers saying your price is fair, high, or low compared to the benefit they receive?
Conduct price elasticity analyses. Where possible, run tests to understand how changes in price impact demand. While more challenging in B2B deal-based environments, elasticity studies in consumer or SaaS models can reveal powerful insights (Harvard Business Review: A Refresher on Price Elasticity).
Remember: Pricing should evolve with your market, not just your cost structure.
Mistake #2: Confusing Complexity with Value
One of the most seductive traps in pricing is believing that more options = more revenue.
Take Wendy’s famous triple burger. It served as a “halo” product—making the double burger feel like a more reasonable (and premium) choice. This is a brilliant use of price anchoring.
The problem? Many pricing teams fall in love with this strategy and replicate it endlessly—creating dozens of SKUs, bundles, and tiers in an attempt to optimize every segment. Over time, this leads to portfolio chaos: overlapping categories, unclear differentiation, and cognitive overload for customers.
Behavioral research shows that when faced with too many choices, customers experience decision fatigue and buyer’s remorse. As Barry Schwartz explains in The Paradox of Choice, excessive options make customers feel like every decision involves a sacrifice, reducing satisfaction and conversion.
The Fix:
Simplify your pricing stack. Every tier, bundle, or SKU should serve a clear strategic purpose. If it doesn’t, cut it; make the hard choice so your customer doesn’t have to.
Design intuitive trade-ups. Customers should immediately understand what they gain by paying more—or what they lose by choosing less.
Limit “decoy” offers. Use anchors and premium tiers strategically, not excessively.
Clarity builds confidence. Confidence drives conversion.
Mistake #3: Treating Pricing as Cost Recovery (Not Value Creation)
Many businesses begin their pricing journey with a simple formula:
Cost + Desired Margin = Price
While this cost-plus model feels safe and predictable, it often leaves value untapped.
Consider Peloton. When it launched, the bike was priced at $1,499. The strategy was classic: sell the “razor” cheap and profit from “razor blades” (subscriptions).
But the problem? At that price, the bike seemed cheap—and potential customers doubted its quality.
Peloton made a bold move: they dramatically increased the price to $2,495 (including accessories and home set up). Demand skyrocketed. Same product. Different perception of value.
This is the essence of value-based pricing—aligning your price to the customer’s perceived value, not your internal cost.
The Fix:
Adopt a value-based pricing framework. Combine competitive benchmarking and customer insight with brand positioning.
Collaborate with your brand and product teams. They’ve done the user research, ethnographic studies, and messaging work to understand how customers perceive your product. Their insights are critical to finding your optimal price point (Harvard Business Review: A Quick Guide to Value-Based Pricing).
Test, measure, and adjust. Use A/B testing or regional pilots to validate value hypotheses before scaling.
Pricing isn’t about what it costs you—it’s about the value you deliver to your target audience, and getting paid for it!
Final Thoughts
These three mistakes—legacy thinking, complexity confusion, and cost-plus complacency—are all fixable. But addressing them requires curiosity, courage and discipline.
Pricing is not a one-time decision. It’s a continuous strategic process that evolves with your product, market, and brand.
Want to see how effective your pricing strategy really is?
Take the following Pricing Strategy Self-Assessment to identify gaps and opportunities in your pricing strategy. After completing it, you’ll receive a free 30-minute diagnostic session with me, Jasper Sabin at Vallenwood Consulting LLC, where we’ll explore how to optimize your pricing strategy and unlock hidden profit.