The price is wrong: why value is more than a number

Price doesn’t live in a vacuum - it’s only ever as strong as the value around it, writes 5D Sydney’s Alex Vishney.

Ask most marketers what the “right” price is for their product or service and they will give you a number. But despite what game shows may suggest, there’s rarely a single case where “the price is right”.

Pricing isn’t binary; it’s fluid and just part of a broader, more complex value equation. The reality is that there’s actually no such thing as the right price, only the right combination of price, product, brand and service that maximises value for both the customer and the business.

But many companies don’t often treat pricing that way. Pricing tends to be isolated, often determined last, and receives a fraction of the attention given to other elements of the marketing mix. In even the most basic version of the value equation (value = what you get for what you pay) there are two sides. On one side you have “what you get”, which is everything a customer buys into when they buy your product: the product and all its benefits, the service, the reputation and positioning of the brand, and all its aspirational value. On the other side, you have “price”. So, price effectively accounts for up to half of the decision-making process consumers make when deciding on a brand or product.

This is especially difficult for services brands, which regularly see “better value” cited in customer churn or satisfaction feedback, but struggle to define what that actually means in practice. For service brands, value goes beyond just price or product to include “softer” attributes like perceived status and loyalty rewards.

So, what is the right price?

This is a question market researchers get asked constantly, but it’s the wrong question. It assumes price is static: either you’ve nailed it, or you haven’t.

The “right” price will depend on many factors, including whether you are trying to maximise volumes, sales or profit. The price that delivers the most volume (typically the lowest price) is almost never the price that delivers the most profit. You actually need a sizeable portion of consumers to reject your product in order to be at an optimal price when it comes to commercial profitability.

Exactly what “portion” of rejectors you need can (and should) be modelled before your product goes to market.

You can’t determine an optimal price without knowing what version of the product you’re selling, as in, are you offering all the bells and whistles or just the basics? Are there tiers? How does your product stack up on features, brand strength, distribution and service? What about the benefits for being a long-term customer, like loyalty programs or volume discounts?

Pricing must be developed in line with these other variables, instead of just tacked on at the end.

The commercial upside of this approach is clear. In an environment where many businesses have been forced to cap or even reduce prices, the default solution has often been “shrinkflation” – reducing the size of the product or the scope of the service – which can have significant negative consequences for customer trust and satisfaction. A more strategic approach is to revisit your value strategy, building a pricing and product architecture that drives stronger margins through perceived value instead of just mechanical price increases.

The upshot here is that you need to stop thinking about pricing strategy and start thinking about value strategy. A value strategy is something that looks at the complex interplay of all elements of the product, including price, and how they interact to create customer value and business returns.

Sometimes, the right value strategy leads to a single product, which is perfectly fine. Other times, it reveals the need for a range: good/better/best versions, subscription models or tailored plans. But the goal remains the same: find the value mix that maximises commercial outcomes.

Here are a few things to keep in mind when building a smarter value strategy

• Model, don’t just test: Use research and analytics to optimise price and feature combinations
• Context is everything: Price needs to flex with channel, audience, and occasion.
• Segment by value: Use customer segmentation to drive product innovation and pricing architecture.
• Start earlier: Develop your value strategy earlier in the product development cycle 
• Revisit regularly: As your product, market, and competitors evolve, so too should your value mix
• Quantify your brand: Understand the role your brand plays in justifying a premium price 

The right question isn’t “what is the right price?” but “what is the right mix?”, which takes into account all product elements.

The price alone is never right or wrong, because it’s never the full story. It only makes sense in the context of value. And value is something you build deliberately, not discover by accident.