When I shop for tomato sauce (yes, I sometimes buy sauce in a jar—I hope the Italian half of my family never reads this), I always find myself overwhelmed by the seven-foot tall wall of red stuff standing between me and dinner. How do I make a choice? I can’t research every single brand of sauce, so my decision comes down to price. I don’t want to buy the cheapest jar on the shelf. I also don’t want to spend ten bucks on a jar of sauce. My frugal nature comes into conflict with my upbringing on homemade sauce that took my grandmother the entirety of a Sunday afternoon to make, and I end up going with whatever costs halfway between the cheapest and the most expensive.

What’s unspoken in my choice is that price signals quality: cheaper is worse, more expensive is better. I’m willing to settle for “good enough.” Some people want the best and are willing to pay for it. Some people need to feed their kids on a tight budget. Others are on the hunt for a bargain. A low price can be framed as “it’s what you can afford,” “it’s no-frills and functional,” or “we know something that lets us produce quality goods at a low price.” Depending on how it's framed, price signals to different customers, "We made this for you.”

Price is one of the “4 Ps” of marketing: Product, Place, Promotion, and Price. That’s why we are talking about pricing strategy on Werx.Marketing and not over on the StrategyWerx blog. We do have a pricing strategy article over there that covers the basics of pricing strategy (follow this link to read it), but in this article, we’re going deeper into the customer-centricity that the marketing department brings to how you talk about your pricing strategy.

Pricing Is Marketing

As the above example demonstrates, a price tag is a marketing message. There will be operational factors to consider, such as cost of materials and labor, when deciding on a price point for a product. In some cases, you’ll also want to consider the pricing strategies of your competitors. But your business should be customer-centric, and reframing pricing strategy as marketing strategy puts the customer at the center of pricing decisions.

How you price your products and services tells a customer a lot about your product: the quality of the materials, the craftsmanship that went into making the product, the level of service you provide. Pricing also says something about scarcity and exclusivity: a too-low price means everybody can buy one, while a prohibitively high price means only a select few will own one.

If you’re a jeweler with twenty years of experience and you produce handmade luxury jewelry, for instance, you’ll want to find a price point that reflects the expertise, craftsmanship, refined aesthetic, and rarity of your products. Your customers are people who are willing to pay top dollar for a piece that speaks to them (or a piece that no one else in the world owns). Price your products too low, and customers might begin to question their quality. If the price is high enough, they can be sure that they’ll be the only one at the party wearing one. Pricing, however, is not as simple as “expensive = high-quality and exclusive.” There are a few more points to consider when developing a pricing strategy that will bring you the right customers.

Pricing Individual Products

Once you’ve determined what message you want your pricing strategy to send, consider how customers will perceive the value of individual products. Returning to the luxury jewelry example, a longer earring feels like it should cost more than a shorter one. A pendant with more detail feels like it should cost more than one with less. Two rings might be the same size, but if one looks bigger than another, customers might expect it to cost more. The right price is the one that matches customer perception and expectation, even if it doesn’t reflect the actual cost of materials or labor.

In order to do this well, you have to know your customers. You have to know what they value, what they find aesthetically pleasing, how they think about spending. Think about how they will feel when they see the price of a particular product. Also think about how they will feel when they don’t see the price of a particular product. Leaving pricing information off of your website entirely sends a message to customers: we are at the top end of luxury, intended for people who can buy the products they want no matter how much they cost.

Dealing With Price Changes

If pricing is marketing, and what you charge suggests something about your brand, what happens when you have to increase your prices? A consistent brand image builds trust; change something about your image—your logo, the design of your store or website, the writing style of your marketing emails—and you risk losing trust with customers. How do you raise prices and maintain trust in your brand?

The answer is to be transparent. Customers will accept reasonable price increases. If the cost of materials is rising, let customers know. When the tariffs were in effect, some businesses even added a “tariffs” line item to their receipts and explained on social media how tariffs were affecting their business. These are moves designed to “preserve the trust of their customers by being very transparent about why they're raising the prices,” as Peter Cohan, management professor and venture capitalist, said in this Business Insider article.

If factors like materials costs or tariffs force you to raise prices, however, you should also lower them when costs or tariffs come down, at least on some products. In this case, maintaining trust and customer satisfaction, and thus customer loyalty and lifetime value, is what’s important.

Pricing as brand identity works both ways. Raising prices without explaining why can hurt your brand, but so can suddenly dropping your prices if your brand is all about luxury, exclusivity, or quality. Even when sales are down, cutting your prices is not always the answer. Lower prices might signal to your customers that you’ve cut corners in terms of quality or are trying to appeal to a mass audience. The solution isn’t to lower your prices but to focus your marketing efforts on finding the right customers.

Customer-Centric Pricing

Pricing is a strategic decision that will influence how quickly you grow and what kinds of customers you attract. There are a lot of other factors to consider, which we cover in this article, but pricing is also a marketing decision. What does this price say about the value customers are receiving? What story about us does this price tell? Do we want to be seen as cheap and accessible or exclusive and luxurious?

Getting it right is one of the most difficult aspects of running a business, especially when you’re just starting out or trying to enter a new market. The missing piece of the puzzle is marketing. When you approach pricing strategy as marketing strategy, you put the customer at the center of your decision-making process, and customer-centricity is the key to sustainable growth.