Your price is too low, and here’s how to find out

‍Introduction

Most brands assume higher prices automatically equal lower sales. But this isn’t always true. In fact, businesses routinely leave revenue untapped because they’re pricing below what customers are actually willing to pay.

The problem? Traditional methods of price-setting—relying on past sales data, competitor benchmarks, or internal margin targets are fundamentally disconnected from real-time buyer sentiment. If you haven’t explicitly tested your customers’ willingness to pay, you’re almost certainly charging less than you could.

Here’s how to identify hidden pricing power, pinpoint thresholds, and discover exactly where you’re undercharging. Without driving away customers.

You’re pricing for comfort, not profit

Cost-plus pricing feels logical: take your costs, add a safe margin, and move on. But your customers don’t care how much it costs you to produce your product. They pay according to their perception of its value.

This subtle trap quietly bleeds revenue, keeping prices artificially low. Symptoms of underpricing, or at least pricing that isn’t working, are easy to spot: high volumes but flat profit, heavy promotions that move units but not revenue, and competitors selling higher without losing share.

(And in many cases, promotions don’t even boost units. If the discount keeps you stuck on the same price plateau, nothing happens except your margin disappears. That’s a whole separate problem deserving its own full article.)

If this sounds familiar, cost-plus isn’t safe, it’s quietly harming your growth.

Historical data locks you in the past

Teams often use last quarter’s POS numbers or competitor price lists as benchmarks for pricing. But markets change rapidly; yesterday’s price might already be irrelevant today.

Competitor pricing is equally unreliable because it’s simply copying someone else’s assumptions, potentially replicating their errors. By following these outdated markers, you anchor your current pricing to old realities, making it impossible to capture the true price your customers would accept right now.

Tools that forecast future pricing behavior often feel modern, especially when they use AI or automation. But if they’re built on historical transaction data or competitor prices, they’re still looking backward, just faster.

To price with precision, you need data from the active market: real people, in real time, telling you what they’re willing to pay.

Demand doesn’t slope, it steps

The idea that increasing price inevitably leads to proportionally fewer sales is oversimplified. Real-world demand doesn’t gently slope downward; it’s shaped like a staircase.

Demand stays nearly constant across wide price intervals, called price plateaus, where customers remain willing to pay more. Only at a certain sharp threshold, the price wall, does demand drop significantly.

For example, your customers might happily buy your product at nearly the same volume whether it’s priced at $49, $52, or even $56. But at $57, suddenly sales drop sharply. Knowing precisely where these plateaus and walls sit is critical for optimizing pricing without losing customers.

Finding your hidden pricing power

How do you identify these plateaus and walls? The answer is straightforward yet overlooked: explicitly test real customers’ willingness to pay.

Modern pricing tools quickly gather responses from your target customers across multiple price points, revealing your true demand structure in hours, not weeks. You no longer need complex studies or months of data crunching. In less than a day, you have a clear, actionable snapshot showing exactly how much higher you can price safely.

What happens when you get it right?

Companies that adopt this approach routinely realize substantial financial gains. According to McKinsey research, businesses that leverage digital pricing strategies achieve sustained margin improvements of two to seven percentage points within months—all without significant drops in sales volume.

One global B2B manufacturer reset prices across thousands of SKUs using willingness-to-pay insights, lifting profitability by three to five percentage points in just three months. The key? Pricing near the top of price plateaus rather than blindly stepping over a wall.

Conclusion

Holding your price steady may feel safe, but it’s quietly expensive. Every dollar you leave behind is a dollar you can’t reinvest in your product, marketing, or growth. By explicitly asking customers what they’re actually willing to pay, you uncover your hidden pricing power, maximizing revenue without driving customers away.

Your customers already know the price they’d happily pay. All you need to do is start asking.

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