Pricing Strategy Negotiations

“Riding the Dead Horse in the Solar Industry: Time to Dismount? 🐎” As we head into 2025, the solar industry is facing serious challenges. Aggressive and artificial price reductions in some components have created unhealthy financial situations for many companies. While price competition might seem like a winning strategy, we economists know it rarely leaves any winners—especially when it’s not backed by a strong survival strategy. The Dead Horse Theory offers a humorous but relevant perspective: “When you discover you’re riding a dead horse, the best strategy is to dismount.” Yet, many companies fall into traps like these: 1️⃣ Buying a stronger whip – Pushing harder without addressing the core issues. 2️⃣ Changing the rider – New management, same problems. 3️⃣ Forming a committee to study the horse – Over-analyzing instead of taking action. 4️⃣ Rebranding the dead horse as alive – Hiding struggles behind flashy marketing. 5️⃣ Comparing the dead horse to others – Justifying failure because others are struggling too. In 2025, surviving the consolidation ahead means adopting a “survival-of-the-smartest” mindset: ✅ Focus on differentiation, not just price. ✅ Build a long-term strategy with sustainable margins. ✅ Invest in innovation that competitors can’t replicate. ✅ Strengthen financial resilience to weather volatility. The dead horse in our industry is the unsustainable race to the bottom on prices. It’s time to stop whipping it and rethink our approach. Those who adapt will not only survive but thrive. 💬 What’s your take? Are we ready to dismount and evolve?

"All vendors look the same. We're choosing based on price." When prospects say this, most reps panic and start discounting. My client John didn't. Here's exactly how he flipped the dynamic. The real problem… You've been lumped into the "sea of sameness." This happens when your discovery was surface level and you didn't create a big enough gap between current state and future outcome. The isolation strategy… Instead of arguing, John asked: "What if all three vendors had the exact same price and contract terms? How would you decide then?" This forces them to reveal their real decision criteria beyond price. When they still stonewall… John used the mirror technique: "In your consulting practice, are you the cheapest option?" They said no. "What would a competitor have to cut out to offer you 50% less than you charge?" Now THEY'RE explaining why cheap doesn't work. Worse talent, bad service, no expertise. The bridge back… "That's no different than our industry. We all have similar cost structures. If someone's doing it cheaper, they're cutting corners somewhere." "Is that really a risk you want to take when scaling beyond Sweden?" The reframe… "You're not buying our service. You're buying certainty that the project works. Visas get processed, onboarding happens on time, no hidden surprises." Prevention is better than cure… The best way to avoid price wars is killer discovery upfront. Uncover current state pain, cost of inaction, future desired outcomes. When you create a big enough gap, price becomes secondary. Keep in mind, the person who wants the deal most usually loses. Stay detached. Be willing to walk away. You have two choices… compete on price and race to the bottom or compete on value and win TOP deals. — Want to see more of how my client John tackles pricing objections, check out our coaching session here: https://lnkd.in/gbBjgxxS

"Is $20/month too much for our product?" Instead of guessing, we used the Van Westendorp method to find our pricing sweet spot. 4 questions revealed exactly what users would pay (and we haven't touched our pricing since). Here's the framework any founder can steal: 1. Send a survey to actual users, not prospects We surveyed people already using Gamma. They understood the real value of our product, not hypothetical value. Too many founders survey their waitlist or randomly select people who have never used their product. That's like asking someone who's never driven about car prices. 2. Ask these 4 specific questions - At what price would this be too expensive for you to consider it? - At what price is it expensive but still delivering value? - At what price does it feel like a bargain? - At what price is it so cheap you'd question if it's reliable? These create bookends for perceived value. You're mapping the entire spectrum of price psychology, not just asking "what would you pay?" 3. Plot the responses and find where the lines intersect Graph responses from lots of users. Where "too expensive" and "too cheap" lines cross: that's your acceptable range. Where "expensive but fair" meets "bargain": this is your optimal price point. 4. Test within the range, don't just pick the middle The intersection gives you a range, not a number. We ran pricing experiments within that range to see actual conversion rates. A survey shows willingness to pay; testing reveals actual behavior. 5. Lean towards generous (especially for product-led growth) We chose to be more generous with AI usage than our "optimal" price suggested. Word-of-mouth growth matters more than maximizing initial revenue. Not everything shows up in the numbers. 6. Lock it in and stop tinkering Once you find the sweet spot through data, stick with it. We haven't changed pricing in 2 years. Every month debating pricing is a month not improving product. Remember: pricing is a signal, not just a number (Image: First Principles)

Pricing shouldn’t feel like a fight. It should feel like a fair conversation between adults who both want the relationship to last. When costs keep rising and margins start to feel thin, the worst thing we can do is spring a surprise increase and hope customers accept it. The better path is to make small, evidence-based adjustments that people can understand, and to do it with enough notice that trust grows rather than erodes. Here’s how I guide teams through it... We set a simple rule first: price reviews happen on a predictable cadence, anchored to a sensible index, and capped so there are no surprises. Then we give customers a choice. A clear Good / Better / Best set of tiers lets people pick the value that fits, and it means we stop discounting just to “make it work.” For loyal customers, we start with a grace period and then move in small, scheduled steps. It’s respectful, and it smooths cash flow for everyone. We also swap blanket discounts for an early-pay credit that protects the list price while bringing cash forward. We add a few fair boundaries so small, urgent, or high-touch work is priced to match the effort. Where costs have increased in one part of the service, we re-bundle so value is obvious and buyers are never misled. And when it’s time to talk, we keep the message short and human: here’s what changed in our input costs, here’s the adjustment we’re making, and here’s what stays the same in terms of quality and scope. If you track a few signals for 30 days, you’ll see better results like: most eligible accounts receive the scheduled uplift, the overall discount rate falls, more invoices are paid early, average revenue per customer increases, and churn and NPS hold steady. The goal is pricing that is predictable, and defensible. Think caliper, not hammer, with measured moves that protect margin and maintain customer goodwill. How do you explain price changes to customers without losing trust? ------- ➕ Follow Jonathan Maharaj FCPA for finance‑leadership clarity. 🔄 Share this insight with a decision‑maker. 📰 Get deeper breakdowns in Financial Freedom, my free newsletter: https://lnkd.in/gYHdNYzj 📆 Ready to work together? Book your Clarity Session: https://lnkd.in/gyiqCWV2

Enterprise pricing: Have MULTIPLE leverage points to use when negotiating. Founders: the conventional wisdom around pricing your product is to keep it simple. Unfortunately this works against you when you’re dealing with enterprise procurement teams. These team are the most sophisticated negotiators you will ever meet. They are single mindedly focused on extracting value for their company. If your pricing is too straightforward or simple, they will hone in on this and beat you down. And it will get worse with every renegotiation. As someone who, in his first PM job, ended up pricing his hardware product below Gross Margin after an enterprise negotiation, take it from me : you cannot go into an enterprise pricing negotiation with a singular point of leverage. You need complexity in the form of multiple leverage points. This is the only way to not give away your entire margin or profit pool. As an example, take a payment processing company selling to an enterprise. Their rack rate might be 2.5%, and they approach the enterprise with a seemingly great tiered deal, which the lowest tier being 1.8% above $100m in volume. (Their cost is 1.6%). Neat and clean, right? Not quite. A sophisticated enterprise negotiator will have a complete understanding of the processor’s cost basis, as well as what % of the processor’s business will be represented by the enterprise. Their counter will likely for their entire volume to be at or below cost. And they won’t budge, since their legacy payment processor offers them (a worse) product at 1.5%, so they have a good BATNA (best alternative to no agreement). The issue here is that the processor has left itself vulnerable by having a single leverage point - the payment processing rate. They tried to add a volume tier, but it’s not separate enough from the rate to use it effectively as a bargaining chip, not against enterprise negotiators. So what should the payment processor do? They must introduce a completely separate axis of negotiation. Essentially a new product or service. Here’s two examples: 1. “Sure thing, we will give you 1.6% for your entire volume. But this will necessitate significant support resources from us. you need to pay us $20k per month for enterprise support. “ Enterprises are perfectly happy to pay a predictable amount for support. This might work well for the first time negotiation. 2. Decompose the payment product into a bare bones payment product, and separate out premium features such as chargeback protection. “Ok, we will match your legacy processor on rate. But if you want chargeback protection, it’s $0.05 per transaction.” This might work as a backup to #1 above, or in the renegotiation after year 2. (Continued in comments)

Since posting our guide on how to price AI software, I've been inundated with founders looking to talk through pricing strategies for their startups. Unfortunately, most are skipping the critical first step.   They are spending lots of cycles iterating on "how" to charge (e.g., usage-based, outcome-based, hybrid, etc).   But they're neglecting the most foundational element: how much to charge. We're finding that with proper ROI frameworks, AI products are able to capture 25-50% of created value, which is significantly higher than traditional SaaS's 10-20%.   Here's how the best founders are achieving these pricing levels:   1️⃣ They bring pricing discussions into the sales conversation early   The worst thing is waiting until procurement to talk about pricing. The role of enterprise procurement departments is to minimize spend, not to assess value. They lack budget categories for 'AI that does the work of 3 people'—so they'll try to squeeze you into their existing software line items.   When prospects seem hesitant to discuss ROI upfront, don't push. Instead, propose a value audit session. Sit down with them after they've used your product for a few months and calculate ROI together based on real usage data.   I've seen founders use this brilliantly during negotiations: "I'll give you a discount, but in six months we need to do a value audit." It's a fair trade that shifts the conversation to outcomes.   Here's a bonus move: always offer outcome-based pricing even if customers don't choose it. Simply presenting it signals confidence and willingness to share risk. When positioned alongside a fixed fee, it makes the fixed fee look fair by comparison.   2️⃣ They calculate ROI holistically, not just hard savings   Most founders focus only on labor reduction or vendor spend cuts. But that leaves money on the table.   Factor in the opportunity cost of time efficiencies. Include potential implementation cost differences compared to traditional SaaS. In many cases, AI products deploy faster and cheaper, which should be reflected in your ROI calculations.   Work with buyers to agree on ROI inputs upfront. Once they've signed off on the framework, challenging the outputs becomes much harder.   3️⃣ They use the "acceptable, expensive, prohibitively expensive" technique   Rahul Vohra used this exact approach from Madhavan Ramanujam’s "Monetizing Innovation" to price Superhuman:   To gauge willingness to pay, ask three questions: 1. "What would be an acceptable price?" 2. "What would be an expensive price?" 3. "What would be a prohibitively expensive price?"   Willingness to pay typically lands near the "expensive" point.   --   I've watched too many brilliant AI founders build incredible products only to leave millions on the table by treating pricing level like an afterthought.   Don't be one of them.   P.S. The complete pricing guide (with the decision framework and tactical playbooks) is live on our website. Link is in comments.

In business, there's a huge difference between price and value. If a client starts the conversation by focusing solely on price, chances are they're not going to buy—or worse, they may not be the right client for your business at all. When a customer is only interested in negotiating the lowest price, they often don't appreciate the value you bring to the table. We realized that as soon as we increased our prices, everything changed. Not only did our revenue grow, but more importantly, our client profile shifted dramatically. We began attracting clients who truly valued the quality and expertise we offer. These clients understood the investment they were making and trusted us to deliver results that justified the price. By raising our prices, we set a new standard, and the clients who recognized that were the ones we wanted to work with all along. Remember, when you charge what you’re worth, you attract clients who value what you offer. It’s not just about making a sale—it’s about building relationships with clients who understand the value behind your work.

Most founders are terrified of their own worth. The traditional business advice says: "Start low and build up." But after working with hundreds of entrepreneurs, I've learned something counterintuitive: Undercharging by 300% isn't just bad for your wallet, it's bad for your clients. Last year, I watched a brilliant consultant struggle with this exact problem. She was charging what felt "safe" instead of what she was worth. When she finally made the shift to premium pricing, something beautiful happened, and it changed how I think about creating fair value exchanges. Here's what I learned about honoring your worth while believing in mutual success: 1. Commitment Over Comfort When people invest appropriately, they're committed to their transformation. Fair pricing attracts founders ready to do the work, not just observers. I've seen consultants charge too little and watch clients disengage, then price fairly and see those same clients implement everything with dedication. 2. Partnership Filter System Fair pricing attracts the right founding partners for mutual growth. You're not just serving clients, you're choosing who you grow with. This creates beautiful partnerships where both parties are invested in extraordinary outcomes. 3. Excellence Creation Mechanism Appropriate pricing gives you resources to create exceptional experiences and deliver transformation at the highest level. When compensated fairly, you can focus entirely on results instead of worrying about covering costs. 4. Positioning Clarity Tool Your pricing positions the value of the outcome, not just the service. Fair pricing communicates the level of transformation you're committed to delivering and signals your belief in what's possible. 5. Abundance Building Practice Every time you price fairly, you're practicing abundance thinking. You're believing there's enough success for everyone and modeling the mindset your clients need for their own growth. 6. Sustainable Impact Engine Fair pricing creates the foundation needed to truly serve at your highest level. This sustainability allows you to show up fully and build long-term relationships based on mutual respect and shared success. This isn't just about charging more, it's about creating systemized, beautiful partnerships where transformation becomes inevitable. When you price your work fairly, you're not being greedy. You're being generous with your belief in what's possible for the founders you serve. The question isn't "Will people pay?" The question is: "Do you believe enough in the transformation you deliver to price it fairly?" The future belongs to those confident enough to value their impact appropriately. It starts with one conversation where you honor both your worth and theirs. __ Enjoy this? ♻️ Repost it to your network and follow Matt Gray for more. Want help applying this in your business? Send me 'Blueprint' and let's chat. Only for founders ready to scale.

Stop copying competitor pricing. These 4 questions will tell you exactly what your specific customers will pay. When we first launched Attic salt, we spent n no of weeks trying to figure out a pricing strategy that will work. Attic Salt is democratising the fashion by bringing in value at a sharp price yet we have to maintain fair wages for our artisans and  technicians who bring the garment alive with so much innovation,skill and dedication. Then I found the Van Westendorp Pricing Model, a simple 4 question method helps you understand how customers really see your price. Used by brands like Dropbox, HubSpot, and Mailchimp, the Van Westendorp model was developed by Dutch economist Peter Van Westendorp.    Here's how it works… You ask potential customers four key questions about price: 📍At what price would this product feel too cheap to trust? 📍At what price would it feel like a good deal? 📍At what price would it start to feel expensive but acceptable? 📍At what point would it feel too expensive to buy?     Now plot these answers on a graph. The intersection points reveal your: Indifference Price Point → where people are split between “cheap” and “expensive”Optimal Price Point → where hesitation from both ends is minimal Acceptable Price Range → your sweet spot for maximum traction When we used this model, we realized we were underpricing. Customers thought the product was “too affordable to be good.” We adjusted, and sales went up without changing a single feature. If you’re launching something new or entering an unfamiliar market, don’t guess. Use this model. Gut feelings are great for design. Not for pricing. Are you still trusting yours? #PricingStrategy #ConsumerInsights #D2CBrands #FashionBusiness

How do you decide the MRP of your products? There are many ways to arrive at the final price, here are a few that brands typically use... Cost + markup: This is the old school way, COGS + a % markup, which can be as low as 1.5-2x (brands like Zudio and Primark that go for volume), or as high as 6-8x (brands like Hugo Boss, Calvin Klein etc. that sell luxury). The markup should be sufficient to cover all marketing expenses, logistics, retail overheads and other expenses and still turn a profit. This is a useful rule of thumb, yet a myopic way of pricing as it fails to consider many other factors such as... Demand elasticity: Yaane ki, when you reduce price by say 10%, how much does demand increase (10%, <10% or more than 10%)? This also varies at each threshold and is hard to predict, and sometimes with veblin goods (status symbols) you even find that increasing price actually increases demand. Testing is the only way to know how inelastic or elastic your demand truly is. Burberry is an example of a brand that's implemented aggressive price increases in the past few years at it looks to move up the perceived value spectrum... The less demand correlates to price, the stronger a brand you have built i.e. people are buying your brand for reasons other than solely price Relative value: How unique is your product relative to the competition and how much value are you offering (a.k.a. is the price justified by some unique selling points & features of the product plus service)? You can benchmark your category e.g., your chinos vs. other brand chinos to understand the general price bands of a category and also get consumer research from your customers on how they rate your brand on many attributes such as product quality and value for money. A true indicator that you are offering good relative value and have found a sweet spot in pricing is a high repeat customer rate coupled with a healthy gross margin %