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Pricing Strategy

Price is not linear. We help you understand price sensitivity, acceptance and optimal positioning.

The Challenge

Most companies set prices based on costs, competitors or gut feeling. The problem? Price is perception, context and thresholds, not a simple function of cost plus margin.

Who is it for?

CMOs, commercial directors and category managers who need to make informed pricing decisions.

Our approach

We start from the top, not from the bottom. Instead of optimizing individual price margins, we first understand the entire pricing landscape: how customers perceive price in the category, where thresholds lie, and what drives acceptance versus resistance. We combine monadic price measurement with observed transaction data to calibrate models against reality. Price elasticity is one of several tools, not the starting point.

Deliverables

  • Price acceptance analysis
  • threshold and barrier identification
  • context-based price simulation
  • calibration against transaction data
  • scenario modeling
  • strategic pricing recommendations with economic impact analysis.

Related reading

Read more about the methods and perspectives behind our work.

Why price is not linear

Price does not behave linearly. A 5% price increase rarely produces exactly 5% lower volume. The reaction depends on where you are on the price scale, which category you operate in, and which thresholds exist in the consumer's perception.

Why pricing must be top-down

Start by understanding the full price landscape, not by optimizing individual SKU margins. Bottom-up pricing leads to inconsistent price images and suboptimal portfolios.

Price perception and context

The price of a product is never perceived in isolation. It is perceived in relation to alternatives, to category norms, and to the consumer's expectations. Context determines whether a price feels high or low.

Price barriers and thresholds

Price has thresholds, points where acceptance drops dramatically. A single unit of currency can be the difference between purchase and rejection. Identifying these thresholds is crucial for profitable pricing.

Why willingness to pay is the wrong question

The question should not be "what are you willing to pay?" but "what do you accept paying?". Willingness to pay measures a hypothetical upper limit. Acceptance measures real behavior.

Interested?

Get in touch to discuss how we can help.

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