# 92% of Companies Price Without Asking the Buyer. Here's What It Costs. **Written by JD Prater — 3x VP of Marketing.** This piece is part of *Open Folders*, which sits at the intersection of marketing science, consulting research, and practitioner experience, opening the parts of the discipline most marketers never got taught, so they can lead the whole of it, not just the slice they came up in. Newsletter: https://jdprater.substack.com Website: https://jdprater.com Original post: https://jdprater.substack.com/p/92-of-companies-price-without-asking At most of the companies I worked at, I found out about the price the same way the customer did. A Slack message. An email. The all-hands where someone put up a slide with the new packaging and the numbers were just there, already decided, and everyone nodded. I remember sitting in those meetings thinking: someone in this building knows how we landed on that number. I don't think it was anyone in this room. The only time it was different was at early-stage startups, where the org was small enough that everyone was in every conversation. Product, finance, engineering, and marketing working through the same spreadsheet. Those were the companies where I had an opinion before the number was set. Everywhere else, I found out after. For a long time I assumed this was specific to me. The companies I happened to work at. The industries I happened to be in. Some organizations are just set up that way, I told myself, and I hadn't landed in the ones that were different. Then Marketing Week ran its 2026 Career and Salary Survey of 2,350 marketers. Nearly 9 in 10 have control over advertising and communications. One in four has a say on pricing. In B2B, it's one in five. Richard Shotton, one of the more rigorous behavioral scientists working in marketing today, made the same observation recently: pricing is where buyer psychology is most visible, and it's the P the marketing function engages with least. The pattern isn't personal. The question is what it costs. --- ## The highest-leverage variable in your business. The buyer was not consulted. McKinsey research: a 1% price increase translates into an 8.7% increase in operating profits, assuming no volume loss. Not a 1% improvement. 8.7%. Price is the highest-leverage commercial variable in the business. A company that gets pricing right by even a small margin compounds that advantage across every transaction it will ever do. Now for how most companies actually set it. Cost-plus. Target margin. If you're a SaaS company you need 70 to 80% gross margin to survive. Your COGS is 20 cents, you charge a dollar. The unit economics are real. The constraint is real. The buyer was not consulted. Wynter research puts the share of B2B companies that run formal pricing research at around 8%. The rest are pricing by unit economics, competitive comp, or gut. Nobody asked the buyer what the price communicates. Nobody asked whether the number signals the right quality tier. Nobody asked how the framing of the choice affects whether someone upgrades. Most companies are making an 8.7%-per-point decision without the one input that determines how buyers actually respond to price. ### Same pill. Different price. One of them worked better. Dan Ariely, Duke University, 2008: two groups receive an electric shock, then a painkiller. Same pill. A placebo. First group: the label says 10 cents. 61% pain reduction. Second group: the label says $2.50. 85% pain reduction. Same pill. Different price. The price doesn't just signal quality. It changes the physical experience. The $2.50 pill works better. The chemistry is identical. Buyer belief about what the price signals changed. Price is psychological architecture. That's a single product, a single purchase moment. Multiply that dynamic across every buyer touchpoint, every quarter, over years. It becomes something else entirely. Google and Kantar, The Effectiveness Equation, 2025: strong brands command prices up to twice those of weaker competitors. A UK skincare brand reduced its price elasticity through brand investment, raised prices 14%, and 76% of the revenue uplift was directly attributable to marketing, per marketing mix modeling. McCain reduced price elasticity 47% over nine years of consistent brand advertising. The examples are consumer brands. The mechanism isn't specific to consumer. Any B2B company that has ever lost a deal on price after months of sales activity has experienced the absence of what these brands built. What built it? The buyer who already knows your brand, trusts it, retrieves it easily when the need comes up. That buyer doesn't start a competitive evaluation from scratch. They have a prior. Brand investment builds that prior. It doesn't just build awareness. It removes the reason to look at alternatives. That's pricing power. Built slowly, invisibly, in the wrong measurement window. That's the strategic layer. There's a tactical one. Thomas Allard, David Hardisty, and Dale Griffin, University of British Columbia, 2019: 253 participants, two New York Times subscription options. Basic: $9.99/month, web and app. Premium: $16.99/month, with web, app, print, podcast, and crossword. Half saw inclusive price framing — the premium listed at its total price: $16.99/month. 23% chose it. Half saw differential price framing — the premium listed as "+$7.00/month." 47% chose it. The mechanism the researchers identify is pricing focalism: buyers evaluate the number explicitly in front of them. $7 is smaller than $16.99. The premium felt less expensive. Conversion doubled. That last study is exactly the kind of test a CRO team runs. The first two are exactly the kind of research a PMM runs. All of it's buyer psychology. All of it belongs to marketing. And yet. --- ## Here's where the research goes. Here's what actually happens at most companies. Marketing is in the pricing conversation, just not the part where the number gets set. PMM runs the willingness-to-pay research. Designs the packaging. Figures out what features belong in which tier. I've sat in those rooms. A PMM presents a solid WTP study. Real buyer data. Conjoint analysis. The leadership team nods, takes the deck. Then the conversation shifts: what's the target margin? What are competitors charging? What do the unit economics require? The research informed the conversation. It didn't determine the outcome. I've watched this happen more than once. The WTP study shows buyers cluster around $150 a month. The unit economics require $200. The price is $200. Nobody in the room asked what $200 communicates to a buyer who doesn't know the product yet. Nobody asked whether $200 positions the product in the right quality tier for this stage of the company's brand development. The research answered "what will they pay?" It never asked what the price says. PMM owns the positioning. The claim about what tier the product occupies, what buyer it's built for. The price is the most credible signal of whether that claim holds. A positioning that says premium and a price that says otherwise is a contradiction. In most companies the team that owns the positioning doesn't own the price. Nobody owns the gap between them. CRO optimizes the pricing page. Tests upgrade flows. Figures out whether three tiers or two convert better, whether the annual discount should lead or follow, whether the enterprise tier should show a price or a contact sales button. The Hardisty study is exactly this kind of test. The number itself gets set by a different team: strategy, biz ops, finance, depending on where you work. A different basis: target margin, competitive comp, unit economics. The PMM research arrives as a deliverable, not a conversation. The CRO data stays in the marketing dashboard. The feedback loop doesn't close. The person running upgrade experiments doesn't know whether the annual pricing changed this quarter. The person who set the annual pricing hasn't seen what the framing test showed. The WTP study ran six months ago and isn't in the room. And at most companies, the PMM research never happened at all. Not just willingness-to-pay studies. Competitive pricing research is PMM work too: win/loss interviews, competitor packaging teardowns, pricing page benchmarking. The data that shows what the market charges and what those prices signal about where each player sits. That research either doesn't exist or arrives after the number is already set. The question "what does the buyer think about this price?" isn't in the pricing process at all. That question belongs to marketing. The process never asks for it. --- ## Three moves worth making before the next pricing conversation Price is the most honest signal your brand sends. Every price communicates something. What category you're in. What quality tier you occupy. What the brand thinks of the buyer. The $2.50 pill works better. The chemistry is identical. What changed is what buyers believe the price says about what is inside. That belief is how cognition works. Marketing is the function in the building with the most developed model for how buyer psychology works. I think it has three moves. Get into the pricing conversation before the number is set. Not at the all-hands where the slide is already built. The willingness-to-pay (WTP) study should be in the room when the commercial decision happens. Four research methods cover most situations: | Method | When to use | What it returns | |--------|-------------|-----------------| | **Van Westendorp Price Sensitivity Meter** | Setting a price with no existing anchor: new product, new market, or after a significant repositioning | The acceptable price range from the buyer's perspective, from "too cheap to trust" to "too expensive to consider" | | **Gabor-Granger** | You have candidate prices from the unit economics conversation and need to understand sensitivity between them | A demand curve: where volume drops off and by how much at each specific price point | | **Conjoint analysis** | Designing tiers or packaging, where price is one variable in a bundle | How buyers actually trade off price against features: what weight they put on price relative to everything else | | **Direct willingness-to-pay** | Early discovery or a quick sanity check when a full study isn't warranted | What buyers expect to pay, faster and less precise than the above | Qualtrics runs all four with built-in analysis. SurveyMonkey covers the first three and is more accessible for teams without a dedicated research function. If the unit economics require $200 and the buyer research clusters at $150, that's a conversation to have, not a data point to file. What does $200 communicate to a buyer who doesn't know you yet? Is that the signal you want to send at this stage of the company? That question needs to be asked before the price is set. Right now it surfaces in churn data six months later, if it surfaces at all. Close the feedback loop. The CRO result should travel back to whoever sets the number next cycle. If a reframe of the price differential doubled premium conversion, that's evidence about how buyers process pricing choices. The person setting the price next quarter should have it. Right now it lives in the marketing team's work and never reaches the people making the commercial decision. Track what volume doesn't show. Volume measures whether people bought at the current price. It doesn't measure whether the price is working or eroding. Discount frequency is the tell: if the sales team is discounting to close, the price is already wrong. Often the reason is simpler than a wrong number. The team doesn't have the tools to defend it. No ROI narrative. No answer to "why $200 when the competitor charges $120." That's a PMM deliverable. Build it before the next pricing cycle, not after the pattern shows up in the data. Price realization over time is the leading indicator volume ignores: actual price paid versus listed price, tracked quarter over quarter. If the brand investment is working, you should hold price with less friction each quarter. That trend is measurable. Most dashboards aren't measuring it. One question worth putting on the table before the next pricing conversation: what does this number communicate to someone who doesn't know us yet? That's the folder. Most companies never open it. --- ### The Monday Version Find out when your company's next pricing review is. Ask to attend. Then come ready. Use [this quiz](https://jdprater.com/pricing-research-quiz) to find out which research method your situation calls for, what it costs, and how long it takes to run. That's the pitch: a buyer intelligence gap, a method to close it, and a number to put next to it. Research completed in Q3 arrives in time for Q4 annual planning, the conversation where next year's pricing gets set. The seat is built before the meeting. --- The dashboard measures volume. Not elasticity reduction. Not pricing power. Not what the price communicated about the brand. Pricing power builds over years. McCain's 47% elasticity reduction took nine years of consistent brand investment. Your standard measurement window is three months. The brand investment made in 2021 is what is letting a company hold price in 2025. It doesn't appear in the model. The contribution is real. The instruments are measuring the wrong time horizon to see it. So the seat never got established. The research became a deliverable. The CRO test stayed in the dashboard. The folder closed. The price got set. Marketing found out after. --- Opening Folders, JD