Pricing Strategies: How to Incorporate Theory into Everyday Practice

After a brief hiatus, I’m thrilled to say I’m fully back. For good. I’ve been submerged in work, riding the highest peak of the luxury hospitality season here in Uruguay. The hustle has been intense, but it’s also sparked fresh ideas, especially around a topic that can make or break businesses: pricing strategies.

When I was deep in the trenches this season, I saw firsthand how the right pricing strategy could transform customer perception, drive demand, and create long-term loyalty. Pricing isn’t just numbers; it’s psychology, positioning, and storytelling. Let’s explore how you can incorporate these strategies into your daily marketing efforts with creativity and ease.

📦 Bundle it

Have you ever how spa packages that include massages, facials, and aromatherapy always seem irresistible? That’s because bundling creates a sense of enhanced value.

Bundling is about offering convenience while subtly increasing the perceived value of your services.

Stat Alert: According to McKinsey, bundling can boost sales by up to 30%.Scarcity: The power of urgency

🚨 Scarcity: The power of urgency

FOMO. An acronym that should be engraved into every Marketer’s brain.

The “Fear Of Missing Out” nudges potential buyers into action. Scarcity and urgency tap into this psychological need to act fast. By using phrases like “limited spots” or “offer ends soon”, you can boost conversions by 10 to 20%.

🦆 The Decoy Effect in action

Imagine offering three marketing packages:

• Basic at $150/month

• Decoy at $280/month (similar to Basic but a bit more features)

• Premium at $300/month

Most customers choose Premium because the Decoy option makes it seem like a no-brainer.

The Decoy Effect isn’t manipulative; it’s about highlighting the value of your best option. This works particularly well for SaaS products, subscriptions, and service tiers.

📊 Dynamic Pricing

Dynamic pricing allows you to adjust your prices based on demand, time, or even customer behavior. Think airline tickets or ride-sharing apps during peak hours.

💸 Freemium Models

Freemium pricing offers basic features for free while charging for premium upgrades. The free tier attracts users, while the premium tier provides value they can’t resist upgrading for.

🗓️ Yearly vs. Monthly Fee Pricing

A common strategy in SaaS is offering a discount for customers who commit to a yearly plan instead of paying monthly. This encourages longer customer retention and upfront revenue.

For example, let’s say your product costs:

• Monthly Plan: $20/month

• Yearly Plan: $200/year (equivalent to $16.67/month)

Customers see the yearly plan as a better deal, saving them $40 over 12 months. Plus, it locks them in for the year, reducing churn rates.

Pro Tip: Highlight the savings visually with phrases like “Save 20% with Annual Billing.”

🫵 Your turn: Applying pricing strategies with confidence

You might wonder: “How do I apply these without coming across as pushy?” Here’s how:

• Storytelling first: Share the narrative behind your pricing. Customers connect with authenticity.

• Transparency: Explain why each option is priced the way it is. Trust builds loyalty.

• Test and uterate: Start small. Experiment with one pricing strategy and monitor the results before expanding.

Pro Tip: Use tools like ProfitWell or Google Analytics to track how pricing changes impact conversions.

Our job isn’t just to sell but to create experiences that resonate and strategies that stick. Pricing is just one piece of the puzzle, but when done right, it can elevate everything else.

What are your favorite pricing experiments? Reply to this email—I’d love to feature your insights in the next edition!

With love,
Eugenia Gallo