Is Your Pricing Strategy Anti-Customer Centric, Creating Distrust?

Pricing anything about services – food, SaaS products, etc. – is a delicate balance between creating margins and what a market will bear. I’ve always referred to it as an art and a science.

In most sectors, competition is high, and companies are always seeking ways to prohibit or dissuade customers from making a jump, while retaining them as valuable purchasers.

One would think, regardless of how a top tier or economy company was positioned, they would want to make their customer experience as seamless and friendly as possible in order to capture those dollars.

Here’s one example where it didn’t work.

A few days ago,I was pricing flights for a long weekend trip to visit friends who had relocated to a new city. As it was going to be relatively quick flight, although not quite commuter, I decided to price out major carriers against the economy no frill carriers.

Using comparison sites such as Kayak, Cheaptickets and Expedia – I was surprised at how prices shown can vary amongst them, I decided to purchase from a the no frills carrier as they had reasonable flight times and the tickets were about $40 less per person.

Navigating their interface, I selected the flights and proceeded to the next screen, where they asked for all the extensive information you need in order to fly these days. I then entered my credit card info, no problem.

Expecting a confirmation screen at this point, I instead was presented with another screen of things I would need to pay for in conjunction with my flight, which included picking a seat, as each one had a dollar amount tied to it, and paying for my carry on bags.

This immediately created a sense of distrust for this airline. If I was getting charged after the fact when purchasing a flight, what other costs would I incur that I didn’t currently know about? What level of comfort did I have trusting them with my credit card info as well?

All told, the options added $100 extra to the flight, pricing it higher than the major carriers on the same route.


Customer relationships are the most important key to sales. If the purchasing process isn’t seamless and forthcoming with information that’s clear and easy to understand, companies lose their competitive edge with selling. It also creates a situation where they’ll have to answer a higher amount of customer questions and likely, complaints, adding overhead, as well as lost time and opportunities due to frustration.

Me? I’ll be cattle herded to the back of a plane in a few weeks, but at least I consciously know what I paid for when I bought the ticket.

What situations have made you distrust a company or service?

Product Pricing – How to Approach the Art and Science Behind your Model

Pricing is the valuation of your product or service. Arriving at one is a healthy combination of art and science. There are over 10 different methods you can assign to figuring out your product pricing model, however, without looking at the variables that go into creating your product, you run the risk of creating problems for your product in the future.

Know your costs
Whether you’re creating the latest and greatest time saver app, manufacturing tools or harvesting produce to sell at a farmer’s market, costs have been incurred in the process. Fixed and variable costs such rent, labor, any debt or loans on equipment and distribution/delivery costs are the basis for knowing what you need to recoup. Create a list, meet with your accountants (or accounting department) to develop an understanding of the costs needed to recoup. What mix of margin percentage and customer acquisition volume is needed to get to profit?

Assess Market Size
Who are your customers and how will you reach them? Creating a list of basic demographics of your product’s customer will help drive estimates of sales, as well as where you’ll need to focus marketing/accquistion efforts.

Look at your competition’s price points. Identify where their strengths and weaknesses are in the marketplace. Run your own scenarios based on their price point. It’s too hard to reverse engineer a pricing model. Identify where your product or service wins and loses based on comparisons with other products out there.

Know your product’s differential points
This is where your products perceived value will come from. When customers recognize the value, it will drive customer acquisition.

Look at what the market will bear
After looking at your competition in the space, where is your product landing? Are you positioning to be a premium brand in the market, or on the value end? Depending on where you want the product to land, is the value proposition to the customer enough to drive a higher price than the competition – or lower to undersell it?

Listen to your customers
Maybe you’ve done a beta period with your product, or if you’ve been operating for a while. Create a customer advisory group. Offer these customers something for their time and feedback. Encourage open conversations about how they’re using your product and value vs. cost to them. Be prepared for the good, the bad and the ugly. By offering to participate however, these customers have taken an interest in your product’s success, so take time to analyze their feedback.

Try Tiered Pricing
Tiered pricing will give you a sense of where the largest interest lies for your product. If you’re not sure you want to offer everything at one price, a test of a tiered scenario could quickly allow you to see what value customers are willing to pay at what price point.

Pricing changes over time due to supply and demand, other emerging products and technology, or market conditions. Your business is an ever changing entity, and innovation and growth come from being proactive (as opposed to reactive) in your marketplace.

Here are some pricing strategies people love. (I found it a better read than listen).

What are your best tips for creating a pricing model?