Pricing Strategy: Why some products can charge 10X more

Some products are commodities. Others command huge premiums. The difference isn't features, it’s signal.

Expensive products are props in a story the buyer is telling about themself.

Companies can charge more when they discover that story and reinforce it.

Think about these expensive brands:

Patagonia gear says “I’m active, healthy, outdoorsy, eco-conscious and financially secure…husband material.”
Aēsop soap in the guest bathroom whispers: “Tasteful but not flashy. Details matter here.”

B2B brands send messages too… and that’s where their margins come from.

Figma says ”We’re a design-led company.”
Linear says “We’re not on Jira. We have engineering taste.”
“Sent via Superhuman” in your email footer says you value your time + inbox zero humble brag.

ChatGPT could probably write a McKinsey-style report on your business. But presenting a ChatGPT report to the CEO would get you fired.

As Peter Drucker said, "The customer rarely buys what the company thinks it's selling."

Find out what they’re actually buying and charge for it – that’s your best pricing strategy.

So, how do you discover what they’re actually buying?

Ask new customers how they justified the purchase internally – "Walk me through how you got this approved, how did you pitch it?"
Look at what happened after the purchase. Did they announce it? Present it? Forward it to someone else? See if you can get a copy.
Or just talk to your best salespeople. They already know.

Ultimately, you’re listening for one sentence: “Now that we use [your product], people will think we're ______."

Commodities compete on features. Premiums compete on story. Now go find yours.