Pricing
Price is what you pay and value is what you get.
Dynamic pricing as human-to-human (H2H) proof of value exchange — buyer and expert meet in the middle on a price that reflects the value delivered, not the cost base. Both sides see the same value at stake, so the price the exchange settles on is fair to each.
Establish value to the customer, not the cost base plus a notional amount. Pricing is positioning made numeric — get the position wrong and no formula saves you.
Algorithm
Principles informing the algorithm include
- Decisions
- Arbitrage
- Intelligent Hyperlinks
- Demand Driven Sales — The job the buyer is hiring you for
Five steps. Each produces a number. Skip one and the price is a guess.
Step 1: Anchor
Map 3-7 competitors. Extract floor and ceiling.
| Competitor Type | Price Range | What They Sell |
|---|---|---|
| Below you (cheap) | Floor | Volume without strategy |
| Adjacent (similar) | Midpoint | Comparable scope |
| Above you (premium) | Ceiling | Brand premium or full-service |
Output: Anchor midpoint = average of adjacent competitors.
Step 2: Score Demand
Four factors, each 1-5. Multiply to get the demand multiplier.
| Factor | 1 (Weak) | 3 (Moderate) | 5 (Strong) |
|---|---|---|---|
| Pain intensity | Mild annoyance | Regular frustration | Hair-on-fire problem |
| Willingness to pay | Expects free | Pays grudgingly | Throws money at it |
| Alternatives | Many good options | Some options, none great | No real alternative |
| Urgency | Someday | This quarter | This week |
Demand multiplier = (Sum of 4 scores) / 12
Range: 0.33 (all 1s) to 1.67 (all 5s). Midpoint = 1.0.
Step 3: Score Supply
Three factors, each 1-5. Your right to charge.
| Factor | 1 (Weak) | 3 (Moderate) | 5 (Strong) |
|---|---|---|---|
| Expertise depth | Learning on the job | Competent practitioner | Recognized authority |
| Capacity scarcity | Wide open calendar | Selective | Waitlist |
| Track record | Zero proof | Some results | Documented case studies |
Supply multiplier = (Sum of 3 scores) / 9
Range: 0.33 to 1.67.
Step 4: Calculate
Target price = Anchor midpoint x Demand multiplier x Supply multiplier
Step 5: Validate
Run four checks before committing:
| Check | Threshold | If Fails |
|---|---|---|
| Gross margin | ≥60% | Raise price or cut delivery scope |
| Kill threshold | Delivery hours <2x estimate | Reprice or reduce scope |
| LTV:CAC | ≥3:1 | Fix acquisition channel first |
| Prospect reaction | "That's reasonable" or "tell me more" | Reframe value, don't discount |
Worked Example
Trail Builder tier from Berley Trails — a $2,500/month positioning retainer.
Step 1: Anchor
| Competitor | Monthly Price | What They Sell |
|---|---|---|
| Freelance content writers | $500-$2,000 | Blog posts without strategy |
| Boutique marketing agencies | $3,000-$15,000 | Full-service campaigns |
| Business coaches | $800-$2,000 | Advice without execution |
| HubSpot platform | $800-$3,200 | Software without strategy |
| LinkedIn lead gen | $1,000-$3,000 | Outbound automation |
Adjacent competitors (coaches + freelancers + LinkedIn): $500-$3,000.
Anchor midpoint: $1,750/month.
Step 2: Demand
| Factor | Score | Evidence |
|---|---|---|
| Pain intensity | 4 | 15-25 hrs/week on biz dev that resets monthly |
| Willingness to pay | 3 | Already spending $2,000-5,000/month on marketing (UNVALIDATED for positioning specifically) |
| Alternatives | 3 | Agencies exist but don't do positioning-first |
| Urgency | 3 | AI window 2-3 years — not urgent but timely |
Demand multiplier = 13/12 = 1.08
Step 3: Supply
| Factor | Score | Evidence |
|---|---|---|
| Expertise depth | 3 | Systems thinking background, framework documented |
| Capacity scarcity | 2 | Wide open — pre-launch |
| Track record | 1 | Zero clients, zero case studies |
Supply multiplier = 6/9 = 0.67
Step 4: Calculate
$1,750 x 1.08 x 0.67 = $1,266/month
Step 5: Validate
| Check | Result | Pass? |
|---|---|---|
| Gross margin | 60% at $2,500 (15 hrs x $67/hr delivery) | Yes at actual price |
| Kill threshold | Model breaks at 2x hours (30 hrs = 20% margin) | Flagged |
| LTV:CAC | 30:1 if referral-sourced | Yes |
| Prospect reaction | UNVALIDATED | Unknown |
The Gap
Algorithm output: $1,266/month. Actual price: $2,500/month.
The $1,234 gap is the positioning premium — the bet that fish psychology, ecosystem thinking, and framework IP justify nearly 2x the calculated price. This gap closes as supply scores improve (case studies, waitlist, authority). If it doesn't close and prospects reject $2,500, the algorithm says $1,266 is the honest price.
Context
- Business Principles — Unit Economics and Value Capture constrain every price
- Business Strategy — Set position before setting price
- Sales Operations — Where price meets the prospect
- Persuasion — Price anchoring and framing
Links
Questions
If price is what you pay and value is what you get, how do you measure the gap between them?
- What does your essential algorithm route — and does the price reflect the routing intelligence or just the output?
- When the matrix shows a high disruption score but low density, does that justify premium pricing or prove the market doesn't exist yet?