Power of Pricing

⏰ Today in 5 minutes or less:

• Pricing strategies affect everyone in the organization – and everyone can impact them.

• Every monetization model has its own operational drag – systems, workflows, finance ops, and even legal reviews. 

• Smart pricing lies at the intersection of margin goals and growth strategy. 

Why Pricing is Everyone’s Business (Even for Non-Pricing Consultants)

Pricing.

It’s the business lever that drives revenue and fuels margin.  

Get it right and you unlock massive value. 

Get it wrong and you’re leaving money on the table – or worse, sending customer straight to your rivals. 

But pricing isn’t just a problem for the finance team. 

It touches sales, marketing, product, operations and even procurement and HR. 

Whether your niche is growth strategy, operations, compliance, or supply chain, pricing decisions impact you – and you can impact them. 

Pricing for the Rest of Us: Principles That Every Consultant Should Know 

The problem? Most consultants are not pricing experts. 

But pricing encompasses every team in an organization – and having foundational knowledge of pricing principles allows every consultant to align their recommendations with the broader strategy. 

I’ve done pricing work on and off for over a decade.

Some members of my team specialize in it.   

And as you work with client teams, here are five principles about pricing I think you should keep in mind: 

Principle One: Pricing and Monetization Aren’t the Same Thing 

Pricing and monetization are both important finance terms, but they’re not interchangeable. 

Pricing is the amount someone pays for a product, while monetization is the strategy behind the business making money. 

Think of it like this: a company with an expensive product but weak monetization model is like a five-star chef selling gourmet meals out of a vending machine. 

Monetization strategy is the architecture of how a business makes money. It includes price, but also discounting, payment terms, transaction models even product features.

It impacts: 

• Market penetration – ability to win market share and channel placement. 

• Revenue capture– ability to charge more or less, plain and simple. 

• Economies of scale – how selling a lot or very few of something affects the financials. 

• Customer retention – keep customers from jumping ship, minimizing sales cost. 

• Long-term profitability – build sustainable margins over time. 

Principle Two:  There's Psychology Involved in Pricing 

Another mistake that consultants often make is assuming that pricing is purely math and numbers. 

Wrong. It’s mostly psychology. 

A product’s price and how it is sold influence a customer’s perceived value and purchasing decision. 

Here are some common examples you might have seen in action (even as a customer yourself): 

• Left Digit Effect – Price is set just below a round number (ex. $4.99 vs. $5.00). It looks significantly cheaper because people focus on the leftmost digit. 

• Good, Better, Best – Introducing a middle option nudges people toward higher-margin products. 

• 'Give Me a Deal’ Effect – A discount makes something feel more valuable than it actually is.  

• Freemium Effect – People pay when they feel like they already own it. That’s why free trials work. 

• Decoy Effect – Offering inferior, dummy options to nudge customers to buy the more valuable product. 

• Luxury Effect – People pay more when a product feels valuable – because of branding, quality, or promised benefits. 

Principle Three:  Monetization Has a ‘Transaction Cost’ 

Every time money changes hands, there’s always a process behind it – and every step costs money. 

The monetization model defines how the company earns revenue, but it also dictates the complexity and cost for executing those transactions.  

Every monetization model has its own operational drag – systems, workflows, finance ops, and even legal reviews. 

Some are easy. Some are messy. And some need a small army and a million-dollar ERP to pull off. 

A simple Shopify checkout with a credit card processor? Cheap and low lift. 

Usage-based billing across global enterprise contracts? That’s a different beast to tackle. 

Big platforms are expensive to build and even more expensive to maintain. 

Without careful planning, companies might end up with a monetization engine that costs more to launch than they make from it in a year. 

Not exactly a dealbreaker, but it should be part of the planning conversation.  

Imagine a client choosing between a subscription model, usage-based pricing, or licensing model. 

Consultants can help them think beyond the revenue upside by asking: 

• Can the current systems support it? 

• How can finance and ops bill, track, and collect reliably? 

• Are they ready for the cost and complexity that comes with it? 

Remember – even the best strategies fail if they can’t be executed cleanly. 

Principle Four: Monetization and the Sales Model Go Hand-in-Hand  

You can’t separate how you make money from how you sell. 

Pricing affects the entire sales motion – what kind of sellers you need, how long it takes to close a deal, and how well the value translates for customers. 

Can the sales team explain how pricing works? Or tie it back to value? 

Are they stuck discounting because no one understands the model? 

Are they chasing payments and burning time on non-revenue activities? 

Every extra step adds cost and friction: 

• Self-serve models (freemium and low-cost subscription) only require minimal attention from sales. Maybe just a small customer support team is enough. 

• Product-led growth needs sales reps to support or upsell customers into purchasing higher-value products. 

• Enterprise deals often require seasoned sellers to negotiate contracts and customize setups. 

• Channel sales means bringing in third-party distributors, which adds new layers of pricing control and margin considerations. 

When pricing and sales aren’t aligned, everyone pays for it – literally. 

Principle Five: Pricing Shapes Economics of Scale 

Offering lower prices can increase the volume of units sold.

This spreads the fixed cost across more units, improving margin over time. 

It’s a classic scale play. 

But in some cases, the opposite is better. 

Higher price limit volume but lead to fatter margins.

This is the luxury strategy, which requires a high elasticity bet. 

Only one is better than the other - and it depends on specific cases.

The trick is to balance price and volume to fit the market, the monetization model, and financial goals of the business. 

Price too high, you’re limiting scale. 

Price too low, you’re in pursuit of more volume to make the venture worthwhile. 

Smart pricing lies at the intersection of margin goals and growth strategy. 

It Takes a Whole Organization to Set a Price 

You don’t have to be a pricing consultant to impact pricing or be impacted by it. 

Most consultants – whether they’re focused on growth, operations, compliance, or supply chain – are already affecting pricing.

They just don’t always realize it. 

Why? Because pricing doesn’t live in a vacuum.

It’s the common thread that ties all departments together. 

The final price of a product is a result of decisions made across entire organizations, from the most obvious stakeholders down to the unlikely players: 

1. Sales: Pricing lives or dies at the deal table. It’s up to the sales team to communicate value, justify pricing models, and manage discounting. Pricing also affects how much time sales reps spend chasing approvals, following up on unpaid invoices, or explaining complex pricing to customers. 

2. Marketing: Marketing teams set the tone for how price is perceived by customers. Messaging, positioning, and demand generation draw the lines between a bargain and rip off. Channel strategy also impacts pricing – products positioned for premium retail need different price structures than those marketed for high-volume online sales.  

3. Finance: Finance owns the numbers, including revenue, margin, and cash flow. Pricing impacts whether the business can hit its growth targets, pay down debts, or fund capital investments. It also determines how quickly the company can collect cash and how simple or complex the revenue model is. 

4. Procurement: Procurement decisions shape input costs, economies of scale, and bill of materials – which all influence the floor for pricing and margin. Better sourcing or supplier consolidation can create room to be more competitive in price. 

5. Customer Success: Supporting a customer costs money. The pricing model has to account for what it takes to deliver onboarding, training, renewals, or ongoing support. If customer success teams are under-resourced because pricing doesn’t reflect the true cost of care, then customer experience suffers – and churn rises. 

6. Operations: Behind every price is a transaction and order to cash system. Can the team easily quote, bill, and collect under the current model? Is pricing flexible enough to scale, or is manual workaround eating time and margin? If pricing changes require months of custom dev work, that’s an operational cost and a pricing constraint. 

7. Compliance & Legal: Pricing should follow rules across jurisdictions, verticals, and customer types. Legal reviews are critical when changing pricing structures, especially when you’re dealing with regulated industries, public sector contracts, or international markets. 

8. Human Resources: Pricing influences headcount cost constraints, compensation plans, capability needs, and staffing models. A move from high-touch enterprise sales to a product-led growth strategy, for example, has huge implications for the roles and skills required, and the cost a company can bear for each.  

Case in Point: The Ripple Effect of a Monetization Model

Imagine a company switching from charging $5,000 upfront to $499/month. 

Seems like a minor monetization tweak – but that one pricing change ripples across the entire business. 

But you can’t fully understand a monetization model unless you understand what price is doing. 

Price signals value, shapes expectations, and determines what the company must deliver over time.

Without it, the rest of the model doesn’t add up. 

And that subscription shift forces every team to adapt: 

• Sales go from closing one-time deals to selling long-term access. New pitches, new incentives, new sales cycles. In reality, new roles and capabilities.  

• Marketing repositions from “buy now” urgency to “stick with us” storytelling. CAC is covered over time rather than upfront.  

• Product must be adopted and show value fast – because monthly customers can cancel anytime. 

• Finance spreads revenue across time. Great for predictability, tricky for cash flow. 

• Customer Success becomes a profit driver. Retention = revenue. Price must cover onboarding, renewals, and support. 

• Operations scrambles to support recurring billing, new SKUs, and customer lifecycle management. 

• Legal and Compliance revise terms, privacy policies, and global pricing rules. 

• HR realigns hiring – from closers to customer managers. 

All these adjustments, just from one pricing decision. 

So no matter where you sit – growth, ops, product, finance – you’re already in the pricing conversation. 

When you understand how pricing flows through the business, your advice gets sharper. Your impact, bigger. 

Because pricing isn’t just a number. It’s the engine behind how companies work. 

You’re Already in the Pricing Conversation – So Make It Count 

Consultants should care about pricing because it touches every part of the business – growth, ops, product, finance, and even HR. 

Even if we’re not setting the price, we still play a role in shaping the systems, messages, and decisions around it. 

Knowing the fundamentals helps us connect the dots, spot issues faster, and align strategy recommendations to the bigger strategy.

You don’t need to be a pricing expert to help. 

You just need to know the fundamentals – and be ready to speak up when it matters. 

Remember, the path to success is paved with continuous learning and embracing fresh perspectives.

Let's stay connected, share ideas, and elevate your consulting business.

Stay curious, friends.

The 2×2 is brought to you by Keenan Reid Strategies

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