Written by Avy Punwasee, originally published on Forbes Business Council
Read the original article on Forbes
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Pricing is one of the most powerful levers a business has, yet it is often one of the most misunderstood. Leaders may spend months refining their product or sharpening their marketing while treating pricing as a quick calculation. In reality, pricing directly shapes profitability, customer behavior and brand perception. At Revenue Management Labs (RML), we have seen organizations across industries make the same mistakes repeatedly. Learning from those missteps can save both revenue and reputation.
Here are five of the most common errors I see companies make with pricing, along with lessons that can help you avoid them.
Treating Pricing As A One-Time Decision
Many organizations set a price once and assume the work is done. The problem is that markets, competitors and customer expectations evolve constantly.
One global manufacturer had conducted a major pricing study and made significant adjustments, but then left prices untouched for years because the effort of implementing and selling the changes was so intensive. In the meantime, the world moved on: New competitors emerged, regulations shifted, sales processes evolved, technology advanced and customer needs changed. By the time leadership revisited pricing, profitability had eroded. When they established pricing as an ongoing capability rather than a one-off project, the company realigned to market benchmarks, improved margins in the first year and made future adjustments far easier because customers now expected them.
Lesson: Pricing should be reviewed and adjusted regularly. Treat it as a living strategy, not a static number. Companies should review their pricing at least once or twice a year, or more often in volatile markets. The review should assess competitive changes, input costs, customer feedback and sales performance versus forecast.
Leaders can ask questions like:
- “Has our value proposition changed?”
- “Are we still aligned with how customers compare alternatives?”
- “Have our customers’ budgets adjusted?”
This keeps pricing relevant and top of mind within the organization.
Confusing Discounts With Strategy
Discounts can be useful tools, but they should never be confused with long-term strategy. Over time, they train customers to delay purchases and weaken trust in list prices.
One SaaS company we worked with relied heavily on quarter-end discounts to push deals across the finish line. Customers quickly realized they would get a better price by waiting. Instead of creating urgency, the practice weakened value. The fix went beyond new discounting rules. It required revising sales processes, training teams on different ways of selling, and tracking their ability to convert customers into redesigned packages. These packages were built to meet the needs of distinct customer groups, making the value clearer and reducing churn. As a result, revenue per customer rose by 22%, and long-term customer value improved significantly.
Lesson: Discounts should be tactical and sparing. Sustainable growth comes from pricing that highlights value, not markdowns.
Ignoring The Customer’s Perspective
Internal cost models and revenue targets often dominate pricing discussions. What gets overlooked is what customers actually value. A logistics company we worked with originally charged strictly by shipment volume. From their perspective, more packages meant more value delivered. Customers, however, evaluated value differently.
For logistics companies, customer value will depend on what is being shipped, the route, whether delivery is guaranteed, the level of damage protection, whether the shipment is last-minute or planned, frequency of orders, and even the customer segment itself. By building these factors into a more nuanced pricing strategy, companies can give their teams clear tools to classify customers and provide service offers that better match their needs. In our client’s case, we found that many customers were willing to pay a premium for reliability and tailored options.
Lesson: Customers define value differently than companies do. Pricing should reflect outcomes customers care about, not just internal cost structures.
Underestimating The Power Of Simplicity
Complex pricing models may look sophisticated, but they often confuse customers and stall sales. For example, one mid-sized software company had built 12 product tiers with multiple add-on fees. The founders believed each option addressed a unique customer need, but buyers found the structure overwhelming and often delayed decisions. In reality, there were only three core differentiators that mattered most to customers. By packaging around those elements into clear core, growth and enterprise tiers, the company made it easier for sales teams to sell, marketing to message and customers to understand.
Lesson: Clarity builds trust. If customers cannot quickly understand your pricing, they are less likely to buy. To simplify pricing, start by identifying the few attributes that matter most to customers, such as usage, features or service levels. Use those differentiators to create clear tiers that map directly to customer needs. The goal is for sellers and buyers to immediately understand which option best fits.
Failing To Test And Measure
Too many companies roll out price changes without testing how customers will respond. Without measurement, decisions become educated guesses at best.
A consumer goods company raised prices across all markets simultaneously by 15%. In some regions, sales held steady, while in others, demand collapsed. A closer post-measure showed the increases were not applied consistently by offer or account, and in many cases, sales reps offset them with discounts that gave much of it back. By running controlled regional tests and tracking actual realized price changes, the company saw that elasticity varied widely. Adjusting increases to local market conditions preserved sales volume in sensitive regions while still delivering an overall revenue gain.
Lesson: Pricing should be validated in the market. This can take many forms. Companies can run research, pilot testing prices in select regions or with specific segments, or gradually phase in smaller changes over time to measure how demand and margins respond. Consider competitive intensity, customer willingness to pay and internal economic factors when considering a testing framework. Testing and measurement provide the feedback needed to refine strategy.
Conclusion
Pricing mistakes are common, but they are also avoidable. By learning from these examples, leaders can avoid repeating these mistakes in their own organizations.
Pricing is not just about setting a number. It is about communicating value, aligning with brand promise and adapting to market realities. When approached strategically, pricing can become one of the most effective tools for growth and long-term success.
