Interview with a pricing expert who supports clients during training sessions and workshops organized by Ornsson Solutions. After reading it, you’ll learn how to avoid common pricing mistakes and develop a price management system that supports your company’s strategic goals.
“I’ve been in this business for years, and I know pricing like the back of my hand.” Many managers see no point in using expert knowledge or implementing a professional pricing system in their company. Why is that?
Paweł Paczuski: It comes down to two conflicting mindsets. Some think it’s simple and doesn’t require any particular expertise. They reason: I know my costs and the market, I know the margin I want to generate – what’s the big deal? A basic Excel sheet will do. On the other hand, some recognize how complex price management is and that implementing it effectively requires systemic changes in how the whole organization is run. Big changes face big resistance – there’s fear about whether it will work and whether it’s the right time. Another issue is the unawareness of the need – managers often don’t realize how much they could gain by professionalizing their pricing processes.
Why should they invest in this knowledge?
PP: Smart, data-driven price management can significantly improve an organization’s performance quickly. It’s easier and cheaper than boosting sales volume or cutting costs. To sum it up – less effort, faster impact. Sounds appealing, right? Here’s a simple example: a company sells doors for 1000 PLN each and sells 1000 units monthly. Fixed costs are 400,000 PLN; variable costs are 500 PLN per unit. That means 100,000 PLN profit per month. To boost profit by 50%, you could cut fixed costs by 12.5% (not easy in an inflationary climate), cut variable costs by 10%, or increase volume by 10% (which usually requires a big marketing spend). Or… you could raise the price by just 5% and get the same effect.
But raising prices can backfire if customers walk away.
PP: Of course – every pricing move needs justification. You need to operate within a certain range. The bottom boundary is defined by unit production costs (either just variable or both variable and fixed, depending on the case). Defining the upper boundary is trickier – it depends on three factors. First: perceived value – how much a customer is willing to pay. This is influenced by functional, emotional, and even ecological contexts – anything that defines the product’s attractiveness to the buyer. Second: the price of comparable competitor products. If someone sells the same mug for 5 PLN less, there’s no reason not to buy it from them. Third: the cost of alternatives. When butter prices spiked, people turned to plant-based spreads. Customers are creative – if your price is too high, they’ll find a way to satisfy their need elsewhere. Some things can be DIY – like painting a room instead of hiring a pro when service prices rise.
The range between the bottom and top boundaries is the optimal pricing zone. If you’re selling to many clients, you can’t set a personalized price for each. You segment the market and set a price for each group that best supports your strategic goals: margin, sales volume, or market share.
You can influence these boundaries, too. Knowing the demand curve, you might set a lower price to increase volume, lowering unit costs. Or improve the product to raise its perceived value, moving the upper limit higher. These variable relationships are fascinating – we demonstrate them in our pricing simulator during workshops.
Where do fears about price hikes come from? Are they valid?
PP: It’s natural to think that if you go too far, sales will drop. That shows up quickly in reports and systems, prompting panic. From that angle, it makes sense. But if you want to raise prices, you need to work on the product and its perceived value, promotion, distribution, or price differentiation through segmentation. There has to be a solid business case. Sometimes the opposite is the problem – underpricing. Companies sell too cheaply because they lack data to see otherwise. In such cases, a small tweak brings a quick boost in profitability without hurting volume.
So is pricing purely rational and analytical, or is there room for intuition?
PP: Data is crucial for minimizing errors. But sometimes you don’t have access – maybe the company lacks reporting tools or time is tight. That’s when intuition matters – backed by managerial experience, it can still deliver wins. But it should be a last resort, not your default strategy. And when intuition is used, the decision should be verified with data ASAP. That’s how you build knowledge within the company.
What pricing management mistakes do you see most often in companies?
There are many, but the biggest is making decisions without broader context. Price isn’t isolated; it’s part of the marketing mix and a system of interdependencies that must be considered. It should reflect both the organization’s strategic goal and the goals of each department.
Another issue is “non-management” of pricing – when price is set by accident, not intention. Say there’s too much stock in the warehouse, and sales is pressured to move it. The obvious answer: discount! But that slashes margins or creates losses, triggers price cuts from competitors, and lowers perceived value. Months of positioning work go down the drain.
Internal pressure is another trap – from the board or other departments wanting to hit quarterly or yearly KPIs at all costs. These short-term actions damage long-term profitability. That’s why organizational culture and clear communication are key – everyone needs to understand the long-term vision and the path forward.
Another mistake: overreacting to competitors. Managing prices and keeping margins high requires nerves of steel. We trust competitors’ professionalism too much and doubt our own insights. But maybe their price cut was due to overstock. It’s often a short-term move you just need to ride out. Misreading the competition often starts price wars.
Meaning?
They cut prices, so they must know something. If I don’t respond, I’ll lose market share. So we slash prices too!
Initially, market share losses are more visible than profit gains. Sales drop, stockpiles grow, liquidity falls. The pressure mounts to clear inventory. After a few discount cycles, everyone is earning less. Eventually, customers suffer too – companies can’t invest in product development, quality declines, and monopolies form. Price wars are lose-lose.
What strategies help survive a price war?
It’s hard, but doable. Differentiation helps – highlight your product’s unique selling points to justify pricing. Another option is to send a clear signal to customers and competitors that you won’t join the war. That can pause further cuts and make others rethink whether margin loss is worth it. Every case is different, but spotting the early signs of a price war is vital. We simulate this scenario often in workshops. Sadly, even seasoned managers struggle to avoid the spiral.
Do crises like pandemics, war, and inflation make pricing harder?
Every problem is a disguised opportunity. Winners are those who adapt fastest. These events – especially inflation – shift the boundaries of optimal pricing. Costs rise, so the lower boundary goes up. Needs shift, customers tighten budgets, and perceived value drops – pulling the upper limit down. Competitors fall, reshaping the market.
In hard times, professional, data-driven management is essential. Without proper analytics, companies fly blind. One or two intuitive decisions might work, but long term, uncertainty leads to crisis or failure. That’s why training and professionalizing pricing is so important – it’s about risk reduction and making the most of resources. Agile management and responsiveness are also key.
How do you start working with a company on pricing?
I meet with the CEO or leadership to identify needs and context. One of the first steps is assessing the organization’s pricing maturity using a dedicated questionnaire. We analyze the results to map out their pricing system. The goal is to go beyond simply setting prices – we help build a structured, long-term system of procedures and mechanisms. We create a tailored structure for customer segmentation, data collection, and testing. This makes the company more mature and improves management quality. It also helps shift the focus from product to customer – which is key for effective pricing.
Not every company is ready for such deep changes.
True, so we usually start small – pick the low-hanging fruit. We work agile, using sprints – short 2-3 week projects solving specific problems. This works well when fast results are needed. Typically, we run basic market tests – tweak a product’s price, observe reactions, and gather data for future phases. That’s just one approach – options are broad. We also demonstrate our working style to earn client trust and show the value of going further. Each process is unique, but our goal is always the same: ensure the knowledge stays in the organization and delivers lasting results.
Why are there still so few pricing experts on the market?
First: there’s no university program focused on pricing. It shows up in various contexts but gets little attention. Also, pricing is interdisciplinary – you need to know products, distribution, marketing, HR. Soft skills are crucial too – pricing affects everyone from product teams to the CEO. You must communicate with all stakeholders. And you have to understand different business models – pricing pizza, cars, and IT services are very different games.
Effective pricing happens where in-house industry expertise meets the external know-how of a pricing specialist. That’s the sweet spot where real value is created.
