If you’re setting your pricing after everything else is done, you’re already behind. This post breaks down five common pricing misconceptions. Whether you're in SaaS, consumer goods, or services, these myths show up everywhere.

1 “ We can't charge more than our competitors ”

You might have anchored your pricing to your competitors, assuming they went through a highly rigorous process to set it. However, they are often just guessing as well.

If you clearly articulate differentiation and value, you can — and should — command premium pricing, even in crowded markets.

2 “ Customers know how much they’re willing to pay ”

Even when customers think they know what they’d pay, their actual behavior is shaped by context. The same person might accept a higher price depending on presentation, timing, or environment. Price perception is malleable.

Asking people what they’re willing to pay is unreliable: it’s speculative and assumes people behave rationally, which they often don’t. This has been repeatedly demonstrated by behavioral economists like Daniel Kahneman.

Take the example of buying a new phone: you might form an impression of a phone’s quality from images on a website, but that perception can change completely when you hold it in your hands for the first time. The weight-to-size ratio and tactile feel influence your sense of value. These sensory inputs are impossible to capture or accurately test through surveys.

3 “Pricing is a one-time decision ”

Wi-Fi in hotels might have been a delighter in 1999; it’s now a basic expectation that no one wants to pay for. Worse, charging for it could even infuriate customers. 

A more recent example: automatic meeting note-takers might have felt magical when they first launched. But the magic fades fast — sometimes in just six months. Users now assume tools like Zoom or Slack will include it by default.

Markets and customer bases mature over time, and competition catches up fast. The features customers value today won't be the ones they value tomorrow. Companies need to continuously research which features create the most delight in order to price accordingly.

4 “Pricing is how much you charge”

Pricing isn’t just about numbers — it’s about how your offer is experienced. It shapes perception, influences behavior, and defines brand value. Both your offer’s structure and positioning determine how your product is perceived, remembered, and compared.

Before settling on your price point, you need to clarify your positioning. The answer isn’t found within your product, it’s found in the minds of your customers. 

5 “ Pricing is the final step ”

Many companies treat pricing as an afterthought, deciding on it only after product development and marketing are set. But since pricing depends on understanding your positioning first, it can’t be the final step.

Pricing should be integrated early, influencing product design, target audience, and positioning. When considered late, opportunities for differentiation, value communication, and profit optimization are often missed.

Tesla’s pricing strategy was set early as part of Elon Musk’s “Master Plan”:

They started by choosing a high-end segment and defining the price point — then built a product that matched the expectations and values of that audience. It’s the opposite of building a product first and hoping to find buyers later.

In summary