Pricing is the most underleveraged tool in the founder's toolkit. Most companies set prices once—usually by adding a margin to costs or matching competitors—and never revisit them. This is a profound strategic error.
Price is not just a number; it is a signal. It communicates value, positions your brand, and shapes customer expectations. A luxury watch priced at £500 is not the same product as one priced at £50,000, even if the movements are identical.
The architecture of pricing involves three dimensions: the price level (how much), the price structure (how it's charged), and the price communication (how it's presented). Mastery of all three creates pricing power—the ability to raise prices without losing customers.
Consider the difference between Netflix and traditional cable. Both deliver video content, but Netflix's simple, transparent pricing structure created a perception of value that cable's complex bundles never could. The structure itself became a competitive advantage.