Pricing Is Cultural, Not Necessarily Rational

I want to return to the question of pricing, because it’s one of the hardest parts of marketing to get right. Pricing is often treated as a technical problem, but in practice it’s as much cultural and psychological as it is analytical.

Economists will tell you that buyers behave rationally. In the real world, they don’t. Customers bring habits, expectations, industry norms, and internal politics into every pricing conversation. Add negotiation on top of that, and it becomes very difficult to point to a single “correct” price.

I was reminded of this recently by a post from Seth Godin, whose writing I’ve followed for years. He writes:

“The pricing norms in any industry reflect the identity of the people who built it.”

Later in the same piece, he adds:

“The price variation in any market reflects not what the market will bear, but what the people in that market can bear to charge.”

His observation matches what I’ve seen working across very different industries. In some industries, price sensitivity dominates. Cost is the first filter, and everything else is secondary. In others, price matters far less than speed, reliability, brand, or effectiveness. The buyer’s mindset—and the pricing norms of the industry—shape what feels reasonable long before a spreadsheet enters the picture.

That’s why pricing can’t be set in isolation. You need to understand how buyers in that market think, what norms they’ve internalized, how competitors position themselves, and what problem the customer is actually trying to solve.

And as I wrote in an earlier post, price only makes sense when it’s tied back to perceived value. If the business problem you’re solving isn’t meaningful to the buyer, the price will always feel too high—regardless of what you believe your service is worth.

None of this is simple. Which is why, especially in enterprise sales settings, I generally believe salespeople need substantial flexibility to navigate these conversations thoughtfully, and come up with a price that is as close to a win/win for both the customer and their company. 

As Seth suggests, pricing isn’t just math. It’s context, culture, and judgment—all at once.

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Read Seth's full post here: https://lnkd.in/ezh7Ns6d

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