Pricing mistakes can silently eat away at your profits, even when your business seems to be humming along. Are you making consistent sales but struggling to see the financial rewards? You're not alone. Many entrepreneurs and business owners face this frustrating situation, often due to pricing errors that aren't always easy to spot.
You might be working tirelessly, seeing a steady stream of customers, yet at the end of the month, your bottom line doesn't reflect all that effort. It's a scenario that leaves many wondering why their hard work isn't translating into financial success.
Good pricing isn't just about picking a number for your product. It's an important part of your whole business plan. It affects how people see your brand, what customers do, and if your business can last. If you get pricing wrong, you might work really hard but make less money. But if you get it right, your business can grow and make more profit.
This article looks at ten common pricing mistakes companies make. It doesn't matter if you've been in business for years or if you're just starting - knowing these mistakes can help you price better. By avoiding these errors, your business can make more money and grow stronger.
Are You Making Consistent Sales But Not Generating a Profit?
If you're working hard, making sales, but still struggling to turn a profit, your pricing strategy might be the culprit. Many businesses fall into pricing traps that eat away at their bottom line, even when sales seem strong on the surface.
Pricing goes beyond solely covering your costs or matching competitors. It's a vital part of your overall business roadmap that impacts everything from your brand perception to your long-term sustainability.
Get it right, and you'll not only boost your profits but also attract the right customers and position your business for growth.
Here Are the 10 Common Pricing Mistakes to Avoid
Let's dive into the common mistakes businesses make when it comes to pricing decisions. Each problem comes with a practical solution to help you make quick changes that will lead to better results.
1. Pricing Way Too Low
The Problem: You're setting your prices much lower than what your product or service is really worth.
If you're new to business, you might price your stuff too low because you're scared. Maybe you're worried about not being competitive, or you don't believe your product is good enough to charge more. You might think the cheapest price always wins customers. But that's not true.
Pricing based solely on "being the lowest" can really hurt your business. You'll make less money on each sale, which means you can't grow your business easily. You'll attract customers who only care about low prices, not how good your product is. Later, when you try to raise prices, you'll lose customers. Worst of all, you might start a price war with your competitors, where everyone loses.
How to Overcome It
To fix this, first learn what others in your market are charging. Think about what makes your product special and talk about that to explain your prices. Don't focus solely on your costs when setting prices – think about the value you're giving customers.
Put your product's value front and center
When you launch something new, start with higher prices and offer discounts instead of starting too low. Keep checking your prices and change them if you need to. Remember, your price should show how valuable your product is, not just how much it costs to make.
2. Product Focused Pricing
The Problem: You're setting your prices based only on your product features, without thinking about what your customers actually value.
It's easy to fall into this trap. You've worked hard on your product, and you know all its cool features. You might think that having more features means you should charge more. Or you might be so excited about what your product can do that you forget to consider if your customers care about all those features.
When you price based just on your product, you might miss the mark on what customers are willing to pay. You could price too high for features customers don't care about, and lose sales. Or you might price too low, not realizing how much value customers see in your product. Either way, you're leaving money on the table.
How to Overcome It:
Start by talking to your customers. Ask them what they like about your product and what problems it solves for them. Find out which features they use most and which ones they don't care about. Use this info to set your prices.
Think of offering different versions at different prices - a basic one with core features, and premium ones with extras. Keep checking in with customers to make sure your pricing matches what they value. Remember, it's not about how cool you think your product is, it's about how useful your customers find it.
3. Hiding Prices from Your Sales Pages
The Problem: You're not showing your prices on your website or sales pages, making customers contact you to find out how much your product or service costs.
Maybe you think hiding prices will get more people to talk to reach out to you to make an inquiry. Or you're worried competitors will see your prices.
Sometimes, businesses do this because their pricing is complicated and they think it's easier to explain on the phone. You might also be afraid that showing prices will scare customers away before they understand your value.
But when you hide prices, you're making life harder for your customers. Many people won't bother to contact you just to find out the price - they'll just move on to a competitor who's more upfront.
You're also wasting your own time dealing with people who can't afford your product.
How to Overcome It:
Be brave and put your prices out there. If your pricing is simple, just list it clearly on your website. If it's more complicated, give examples or price ranges.
One of the best ways to display your prices – no matter how complicated the setup – is with a pricing table. This tool allows you to clearly show different options, features, and price points side by side.
And you can easily set one up with the right tool. I’d recommend using Thrive Architect because it comes with a variety of customizable pricing tables you can add to your website in a couple of seconds (check out this tutorial here).
But this tool does so much more than just give you good-looking pricing tables. When you purchase Thrive Architect, you get access to a large selection of landing page templates and design elements to create eye-catching pages that show your products in the best light.
4. Not Testing Your Pricing
The Problem: You're sticking with one price without ever trying different options to see what works best.
Many business owners set a price once and forget about it. You might be scared to change prices because you don't want to upset customers. Or maybe you think testing prices is too complicated or time-consuming. But, people just don't realize how much difference a small price change can make.
By not testing your prices, you're probably leaving money on the table. You could be charging too little and missing out on profits. Or you could be charging too much and losing customers.
Without testing, you don't know how elastic your pricing is - which is a fancy way of saying how much demand changes when you change your price. You're also missing out on valuable information about what your customers value and what they're willing to pay.
How to Overcome It:
Start small with price testing. Try raising or lowering your prices by a small amount and see what happens to your sales.
If you sell online, use A/B testing (which you can learn more about here) to show different prices to different customers and compare results.
Keep track of how changes affect not just your sales, but also your profits. Don't be afraid to ask customers for feedback on your pricing.
The goal isn't always to find the highest price - it's to find the price that gives you the best overall results for your business. You're sticking with one price without ever trying different options to see what works best.
5. Fake Special Offers
The Problem: You're creating false urgency or scarcity with "special offers" that aren't really special at all.
I get it. It's tempting to use fake deals to push customers to buy. Companies who do this tend to think that saying something is "on sale" or "limited time only" will make people buy faster.
But, fake offers can backfire big time. Smart customers can spot these tricks, and it makes you look dishonest. You'll lose trust, and once trust is gone, it's hard to get back. Regular customers might get annoyed if they realize your "special" prices are always available. Over time, people might stop believing your real offers too.
How to Overcome It:
Be honest with your pricing and offers. If you want to run a sale, make it a real one. Set a clear start and end date, and stick to it. When you say something's limited, mean it.
Use real time-scarcity - like truly limited stock or time-sensitive deals - instead of made-up urgency. Focus on showing the true value of your product rather than tricking people with fake discounts.
If you want to encourage quick decisions, offer genuine bonuses for first-time buyers instead of pretend sales.
Remember, building trust with your customers is worth more in the long run than any short-term boost from a fake offer.
6. Running Too Many Discounts
The Problem: You're always offering discounts, sales, or special deals on your offers.
It's easy to fall into the discount trap. You might think that constant sales will keep customers coming back. Maybe you're worried about losing customers to competitors, or you're trying to hit short-term sales targets.
But, always discounting can really hurt your business – especially if you’re just starting out. Your customers might start to think your regular prices are too high, and only buy when there's a sale. This trains them to wait for discounts, hurting your cash flow. Your profit margins take a hit, making it harder to grow or invest in your business. Frequent discounts can also make your brand look cheap or desperate. Over time, you might find it hard to sell anything at full price.
How to Overcome It:
Be more strategic with your discounts. Use them sparingly and for good reasons, like clearing old stock or rewarding loyal customers. Also, save them for important sales holidays like Black Friday and Cyber Monday. Instead of constant sales, focus on showing the value of your product at its regular price.
Try other ways to attract customers, like improved service or exclusive features. When you do offer discounts, make them special - limit them to certain products or time periods. Consider non-price promotions, like bundling products or offering extra services. Remember, it's okay to say no to discount requests sometimes. Your goal should be to build a business where customers are happy to pay full price because they see the value in what you offer.
7. Failing to Communicate the Value of Your Offer
The Problem: You're not clearly explaining why your product or service is worth the price you're charging.
Sometimes, you might assume that the value of your offer is obvious. Or maybe you're so focused on features that you forget to talk about benefits.
Another problem could be using language that's too technical or confusing for your customers. Some businesses get so caught up in pricing strategy that they forget to explain why their product is worth buying in the first place.
If customers don't understand your value, they're less likely to buy - especially if your prices are higher than competitors. They might think you're overpriced, even if you're offering more. This can lead to lost sales, price complaints, and difficulty attracting new customers. You might find yourself constantly competing on price instead of quality or uniqueness. Over time, this can push you into a low-price, low-profit business model that's hard to escape.
How to Overcome It:
Start by really understanding what your customers care about. What problems does your product solve for them? How does it make their lives better? Once you know this, make it the center of your marketing. Use clear, simple language to explain the benefits of your product, not just its features (learn more about conversion-focused copywriting here).
Use your design tools to really drive the point home. For example, you could use a “Features and Benefits” section to spell out how your product will change your potential customers’ lives.
Add visuals and address your reader directly to let them understand how good your product is for them. Just like what we did with our Thrive Architect sales page:
Share customer stories and testimonials that show the real-world value you provide. But don’t just paste a wall of text. If you have a page builder like Thrive Architect, you can easily display your testimonials in one of our neat templates:
If you have unique selling points, make sure they're front and center. Don't be afraid to compare yourself to competitors if you offer more value.
8. Overlooking the Benefit of Product Bundles
The Problem: You're not using product bundles as a pricing strategy, missing out on a great way to increase sales and provide more value to your customers.
A lot of businesses stick to selling items individually because it seems simpler. You might think bundling is too complicated or that it only works for big companies. Some worry that bundles will cannibalize sales of individual products.
But, there’s a chance you're missing an opportunity to boost your average order value.
Customers who might have bought just one item could have been tempted to spend more on a bundle. You're also not giving customers the full experience of what your products can do together. This can lead to lower customer satisfaction and fewer repeat purchases.
How to Overcome It:
Start thinking about how your products or services could work together. What combinations would give customers more value? Create bundles that make sense, like a "starter kit" for new customers or a "deluxe package" for your best sellers.
Some of the bundles we offer at Thrive
Price your bundles so they're a better deal than buying items separately, but still profitable for you. Use bundles to introduce customers to products they might not have tried otherwise. You can even create limited-time bundles for special occasions or seasons.
Bundles can be a win-win: customers get more value, and you increase your sales.
9. Failing to Offer Upsells, Downsells, and Cross-Sells
The Problem: You're not giving customers options to buy more, buy a cheaper alternative, or buy related products during their purchase journey.
Some business owners shy away from upsells and cross-sells because they think offering extra options is pushy or annoying to customers.
Maybe you're worried about complicating the sale or confusing buyers and just want to focus on getting the initial sale and forget about these extra opportunities.
But missing out on this approach means you're leaving money on the table. Customers who are ready to buy are often willing to spend more or add related items. So, skipping out on these offers means you're missing a chance to increase your average order value.
What about customers who don’t want to purchase your main offer?
That’s where downsells come in. Offering a low cost alternative to your main product is a great way to save the sale and earn some money.
How to Overcome It:
Start by mapping out your customer's buying journey. Look for natural points to offer related products (cross-sells) or upgraded versions (upsells). For customers who hesitate at the price, have a lower-cost option ready (downsell).
One of the smartest way to do this is with a tiered pricing table. Offer a higher and lower price point for customers who either want more, or aren’t ready to commit to your main product.
Make sure these offers make sense - they should add real value, not just be random add-ons.
10. Not Adjusting Pricing Over Time
The Problem: You're keeping your prices the same for too long, ignoring changes in your costs, market conditions, or the value of your product.
It's easy to set and forget your prices. You could be afraid of losing customers if you raise prices, or you're just too busy to review them regularly.
But, sticking with old prices can really hurt your bottom line. If your costs go up but your prices don't, your profits shrink.
You’ll find yourself working harder for less money. On the flip side, if your product has improved or the market has changed, you could be charging too little and missing out on profits.
Over time, not adjusting prices can make it hard to invest in your business or keep up with inflation. You might even start to resent your customers if you feel you're undercharging them.
How to Overcome It:
Make price reviews a regular part of your business routine. Set reminders to check your pricing every few months or at least once a year. Keep track of your costs and be ready to adjust if they change significantly.
Stay aware of what competitors are charging and what's happening in your industry. If you've improved your product or added features, consider if your price still reflects its value. When you do change prices, communicate clearly with your customers about why. For long-term clients, you might phase in changes or give advance notice.
Don't be afraid to raise prices if you need to - most customers understand that costs go up over time. The goal is to keep your pricing fair for both you and your customers.
Next Steps: Revise Your Current Pricing Strategy
Now that you're aware of these common pricing errors, it's time to take a close look at your own pricing setup. Start by reviewing each of these points and honestly assessing where your business stands. Are you guilty of any of these pricing errors? Don't worry if you are - many successful businesses have made these mistakes at some point.
The key is to take action now. Choose one or two areas to focus on first, rather than trying to overhaul everything at once. Maybe you'll decide to be more transparent with your pricing, or perhaps you'll experiment with product bundles. Whatever you choose, make a concrete plan with specific steps and deadlines. Remember, pricing isn't a "set it and forget it" task - it's an ongoing process of testing, learning, and adjusting.
Pricing Mistakes: Wrapping It Up
Pricing right can make a big difference to your business. Let's recap the main points:
Be careful not to price too low or too high. Show your prices clearly to customers and don't discount too often. Make sure people understand why your product is worth the price. Keep checking and updating your prices as your business grows and changes.
Remember, good pricing helps you make more money and keeps customers happy. It's worth taking the time to get it right.
What about you? Have you dealt with any of these pricing problems? Or do you have other pricing tips to share? Let us know in the comments below. Your experience could really help other business owners!
