Home topics small-business-resources social-media-strategy-social-media Small Business Strategy Small Business Oops… my business made a pricing mistake Stephen Barnes April 16, 2018 In my recent article, How to work out what price to charge , I discussed how pricing is one of the most crucial decisions business owners and managers must make, while touching on the eight rules for pricing effectively… But what happens when you get pricing wrong and how do you recover from pricing mistakes? In this article, I’ll look at some common pricing mistakes and then, in a subsequent one, I’ll discuss the fixes. Pricing mistakes can be put down to two broad issues – mistakes with pricing psychology and pricing strategy mistakes. Pricing psychology mistakes There is a concept known as a pricing paradox (sometimes called ‘water-diamond paradox’). With the water-diamond paradox, we understand that water is necessary to our life and that ornaments such as diamonds are not life-sustaining. But water typically has a low market price, while diamond jewellery has a high market price. The reason is due to what is known as marginal utility and price is based on the value or utility someone places on a product. Consumers will pay based on their perceived value or utility, at a point and place in time. Consumers don’t consider your business’ circumstances, business environment or competition when deciding if they will pay the price for your product or service. Common pricing strategy mistakes Unfortunately, pricing is a bit like magic – there is no formula