Commercial Strategy Report
The Price You Set Tells a Story
Why price signals positioning, capability, and intent long before a customer reads the rest of your message
Price is not just a number. It signals identity, capability, and intention. When businesses compete by being the cheapest, they often weaken their long-term position. Strong pricing reflects real value. It tells the market what kind of business you are, what standard you are willing to defend, and what sort of result the customer should expect.
Why Competing on Price Becomes a Trap
Many small business owners start by looking at what others charge and then set their price slightly lower. It feels sensible, especially when you are new and want to gain clients quickly. But this habit often leads to a difficult position. You end up working more for less. You also struggle to communicate the real value of what you offer.
More importantly, choosing to be the cheapest shapes how people see your work. It places you in the category of low value, even when your work is meaningful, skilled, or thoughtful.
Lower prices suggest lower value. People use price as a clue. If something costs less, they assume it is less capable, less durable, or less professional. This perception is stronger when customers cannot touch the value immediately, as in coaching, consulting, design, or anything based on expertise.
Low prices also reduce your ability to do good work. A sustainable business needs margin to think, improve, and grow. If the price barely covers the effort, you end up cutting corners or exhausting yourself. That is not a healthy foundation.
Price does not only affect revenue. It shapes perception, customer behaviour, and the kind of business you are able to become.
Cheap Pricing Often Attracts the Wrong Demand
Cheap pricing often attracts the wrong type of customer. Clients who negotiate the hardest on price often demand the most, and they are usually the ones who stay the shortest. Higher-value clients usually want clarity and results, not discounts.
This does not mean high prices automatically create quality. It means price changes the expectations around the relationship. A low-price model often encourages transactional behaviour. A stronger pricing model makes it easier to anchor the conversation around outcomes, standards, and fit.
A Better Approach: Price Based on Value
A more strategic and sustainable pricing method is value-based pricing. This means your price reflects the difference your work creates for the customer.
Instead of asking, “What are others charging?”, the more useful question is, “What genuinely improves for the customer because of this?”
Saving time, reducing mistakes, or helping people reach a result faster has real value.
Improving revenue, operations, quality, or decision-making creates practical and measurable impact.
Reducing stress, confusion, or friction can be highly valuable even when the effect is less visible.
Identity, environment, craft, and emotional significance also influence what people are willing to pay for.
It does not need to be dramatic. It simply needs to be real.
What Customers Are Really Paying For
Two Coffee Shops. Coffee Shop A sells coffee for €2,50 and focuses purely on price. Coffee Shop B sells coffee for €4,00. It offers space with tables and natural light. It is a place where students write and colleagues meet. The coffee itself is not much different, but the experience is. People do not pay the extra €1,50 for the drink. They pay for a place to think or rest. Coffee Shop B is not selling coffee. It is selling a moment of calm.
A Handmade Design Product. A ceramic cup can cost €5 in a supermarket. A handmade ceramic cup made by an artist can cost €45. The cup itself holds liquid in the same way. But the meaning is entirely different. The €45 cup carries time, craft, personality, and a sense of owning something made by a particular human being.
Consulting and Professional Expertise. Two consultants offer help improving internal operations for a company. Consultant X charges £400 per day and focuses on tasks. Consultant Y charges £4.000 for a defined outcome, for instance reducing delays in decision-making by redesigning communication flows and meeting structures. Consultant X sells time. Consultant Y sells improvement. Time is cheap. Progress is valuable.
Customers rarely buy the object or the hour alone. They buy the difference it creates in their work, identity, comfort, or progress.
A Practical Framework You Can Use
Better pricing usually comes from clearer thinking, not from copying the market too closely.
What does it genuinely take to deliver this without harming your wellbeing, standards, or growth?
What changes for the customer because of your product or service?
How do you want to be recognised: affordable, standard, or premium? This is a choice, not an accident.
Competitor research should create awareness, but it should not dictate the final price.
- What is our price currently signalling about our quality and positioning?
- Are we pricing from fear, comparison, or a clear understanding of value?
- Does our margin allow us to deliver strong work consistently?
- What kind of customer behaviour is our current pricing model attracting?
- Are we selling time, or are we selling meaningful progress and results?
- Does our price reflect the truth of our work, or only the pressure to be chosen quickly?
The Question That Matters
Cheaper is rarely a long-term strategy. It weakens your position, strains your energy, and often hides the real worth of your work.
A healthier approach is to price with clarity and self-respect, to recognise the value you create and communicate it clearly. Your price is a reflection of the care, the thinking, and the result you offer. It should represent the truth of your work, not the pressure to be chosen quickly.
References
Nagle, T. and Müller, G. (2016) The Strategy and Tactics of Pricing. Routledge.
Zeithaml, V. A. (1988) ‘Consumer perceptions of price, quality, and value’, Journal of Marketing, 52(3), pp. 2–22.
Monroe, K. B. (2003) Pricing: Making Profitable Decisions. McGraw-Hill.
Starbucks Corporation (2023) Annual Report.