Price Tags and Profit Margins: The Science You're Missing with Per Sjofor

Pricing might be the most powerful yet underutilized profit lever in your business toolkit. In this eye-opening conversation with Per Sjöfors, "The Price Whisperer," we uncover why most businesses leave substantial money on the table through ineffective pricing strategies.

Per reveals the shocking mathematics behind pricing power: while a 1% increase in sales volume typically yields a 3.5% profit increase, and a 1% cost reduction generates about 5.5% more profit, a mere 1% price increase can boost profitability by a staggering 11.3%. Despite this leverage, most companies rely on guesswork, cost-plus formulas, or competitor matching—approaches that severely limit profit potential.

Drawing from his experience running multiple companies and conducting pricing research across approximately 5,000 products and services, Per debunks common pricing myths and introduces a scientific approach anyone can implement. He shares a practical method for solopreneurs and small businesses to determine their optimal price range: interview at least 25 prospects and ask two specific questions about price thresholds. This approach works equally well across B2B and B2C contexts because pricing psychology follows similar patterns regardless of market type.

The conversation also explores behavioral economics principles showing why pricing too low can actually decrease sales by creating perceptions of poor quality. Even retail giants like Walmart have shifted away from purely price-focused messaging after seeing declining sales when customers associated low prices with inferior products.

Whether you're a podcaster monetizing your platform, a consultant valuing your expertise, or a business owner setting product prices, this episode provides actionable insights to transform your pricing strategy and significantly boost your profitability. As Per reminds us in his parting wisdom: "You can always increase prices. If it doesn't work, you can always revert."

Chapters

• 0:00 Welcome to Communication Connection Community
• 0:34 Meet Per: The Price Whisperer
• 1:30 The High Leverage of Pricing
• 5:16 Common Pricing Mistakes Companies Make
• 9:20 The Science of Effective Pricing
• 14:38 Finding Your Price Range
• 19:20 Final Thoughts on Pricing Strategy
• 25:37 Episode Closing and Credits

Transcript

Carl: 0:04

Welcome to Communication Connection Community the podcaster's podcast. This podcast takes a deep dive into modern day communication strategies in the podcasting space. We chat with interesting people who make the podcasting and speaking spaces exciting and vibrant. We also dive into the podcasting community with news updates, latest trends and topics from this ever-evolving space. So strap in, it's going to be one amazing ride. Let's dive into today's episode. Per, aka the Price Whisperer, is a thought leader and author in everything pricing and how companies can use pricing to drive higher growth, sales volume and profits. He's a sought-after speaker for various conferences, appears regularly on podcasts and business radio shows and gets routinely quoted in the financial and business press, and we're so thrilled to have him joining us today. Per, welcome to the podcast.

Per: 1:05

Carl

Per: 1:06

it's a pleasure to be here.

Carl: 1:08

I'm stoked to find out about pricing. I think it's something that, as business owners, at some point we struggle with it. How do you do this pricing thing? And quite often, we undervalue our services, and I know podcasters undervalue a lot of the things that they do as well, especially if they're offering services directly from their podcast. I want to ask you, though how did you get into this field? What led you to where you are

Carl: 1:30

today

Carl: 1:30

?

Per: 1:31

First

Per: 1:31

of all, you have absolutely right that people say this is very important, and I think that is because many business owners and so forth simply doesn't know that there are better ways to set prices than what they currently do and I'll get to that in a second. But to answer your question, the reason I'm doing what I'm doing is that I had a chance to run a couple of companies in Europe and then eventually I was recruited to move here to the US in the mid-90s and I established and ran a division of a fairly large public company and again headhunted several times to several other CEO jobs. And in all of these instances we did experiments with pricing and some of those experiments were very successful, meaning that next quarter revenues are up by 25% or so. Others were complete duds 25% or so.

Per: 2:28

Others were complete duds, and what I'd learned in business school was so academic and theoretical that it didn't help us to understand why some experiments worked and some pricing experiment didn't work at all. So when it was time for me to set out on my own, I decided to develop a process to make sure that every pricing experiment is successful, and that process, in short, consists of understanding that everything a company does affects how you can set prices, how your marketing works, how your sales works, how you present yourself, how you present prices by themselves affects how those prices could be set. So everything you do in a company affects the ability to price.

Carl: 3:12

You said something very interesting off the top and you mentioned business school, so I want to just jump off that for a minute there. Do you think part of the challenge when it comes to setting prices? We live in a time where a lot of people are looking at self-employment as an opportunity to get out of the rat race, so to speak, and do their own thing. They haven't necessarily had that formal business training or spent years going to university to learn business. Do you think that's maybe part of the challenge? Is that there's maybe a education that hasn't happened, that maybe should happen or should have happened in that space.

Per: 3:52

Honestly, business school is highly overrated. And, first of all, if you look at, there's statistics out there saying that about one third of American CEOs have an MBA and and obviously two-thirds don't, so at least the value I got was terminology and a bit of process, but pricing was something that it was like two hours on a Tuesday afternoon. Honestly, I don't remember, but there was very little of it. Honestly, I don't remember, but there was very little of it. And this is sad because pricing has higher leverage on a company's profitability than anything else you do in a company. And in fact, there is a very simple calculation anybody can do and that is if you look at any company's profitability, it comes from only three variables it is the total cost of the operation, it is the total sales of whatever the company is selling and it's the price of whatever it's selling. Very simple and for an average company and of course no company is average but for an average company, if you do a thought experiment and you want to change one of those 1%, what will happen is that, again, for that average company, if you can increase your sales volume with 1%, profitability goes up with 3.5%. If you can reduce your cost by 1%, profitability goes up with 5.5%. But if you can increase your price or decrease your discounting, profitability goes out with 11.3%, sort of related to that, I do something that I call the 1% challenge, and that challenge is simply have you ever failed to change something? 1%, of course not. It's so small.

Per: 5:51

And the other thing to consider in that is that profits is what drives every company. If you don't have profits, eventually your company is either going to die or it's going to shut down, or it's going to be sold to somebody. Your company is either going to die or it's going to shut down, or it's going to be sold to somebody. Now some companies are very lucky because they have investors that are willing to spend oodles of money for years and years before the company becomes profitable. But that's a luxury that very, very few companies have. Better profitability means you have more resource in your company for more marketing, for more product development, for more sales activities, even more money to hire better and more expensive people. So profits is the key and companies who can increase their profitability. They don't just put all their profits in a bank account, they actually do something with them. That's why pricing is such an important portion of this because it has that highest leverage on profitability.

Carl: 6:56

So

Carl: 6:56

why is it then that companies make these mistakes when it comes to pricing? What's the catalyst here?

Per: 7:04

Well, let me tell you a story about that. I had this conversation with a company, the CEO of this. It's a SaaS company. They do contract management in some form or shape. I can't remember exactly how they do it, but the conversation I had with the CEO was like this. He said I've decided that the price should be $165 a user a month. And then he continued saying but maybe it should have been $99. Or maybe it should have been $250. I don't know, but $165 just felt good. Is that the best way of pricing? Absolutely, I'm thinking no. You're thinking no is the right answer. And this was maybe even 10 years ago. I had this conversation and I just recently looked at the company's website and it was the same website as it was 10 years ago. Wow. So I make the assumption that the company has not been a raving success.

Carl: 8:14

So, in saying that, then, is it that the company's individuals or companies don't know how to price? What are some strategies, then, that people need to know when they're embarking on pricing their services or pricing their products, barking on pricing their services or pricing their products?

Per: 8:31

Well, if we look at the main ways of pricing is just what this CEO I just mentioned. They just guess, guess or gut feel or whatever you want to call it, and that, of course, is not a good way. Another not so good way is to use cost plus, so a company calculate their costs and then they slap on the margin, and that cost plus margin can either be something that their board have said we have to have this as a minimum margin or sometimes they even say we have a margin corridor, which means that there is a minimum margin but there is also a maximum margin. Why would you want a maximum margin? You want to be able to have as high margin as you can. But there's more to that, because almost every company has some products or services that are commodity or commodity-like and they need to be sold on low price. Because a commodity is being sold on low price but the same company almost always have some products or services that are unique in some way, and when you have a unique product or service, you have pricing power. So if you then have the same margin for those commodity products, they're going to be too. Have a unique product or service, you have pricing power. So if you then have the same margin, for those commodity products they're going to be too expensive and for the unique products they're going to be too cheap. So that's one of the issues with cost plus.

Per: 10:06

And another very common way and a mistake to price is to look at competition. Common way and a mistake to price is to look at competition. And fine, if you have your competitors, if they have prices on their website in some form or shape, you can get a hint of what the price should be. But you don't know if they're changing their prices eight times a day. You don't know what special deals they've been making, special bundles, special discounts. You don't know if the website is geotagged so that, depending on where you come in from, price is going to be different. You don't know that if you click away and then come back, the price is going to be the same or different. So that is not a good way of you still don't know exactly what they're charging.

Per: 10:57

When you start by pricing to competition like that, that is often the first step into the commoditization death spiral, because you start pricing as your competitors, as you think you can, and then you start using the same marketing messages and the same feature sets. And then you're a competitor sorry, a commodity and commodities sold on the lowest prices possible and related to this pegging price to a competitor. If you sell to customers this is most likely more B2B customers without your competitors having their prices on the website. There are people out there who say we price to the market. What does that mean? If the prices aren't visible, what is the market price? Or they send out their salespeople and say they will take the best price they can get. Well, we all know that salespeople are going to come in with the absolute lowest price they can because they think that that is the quickest way of getting a sale and getting their commission.

Per: 12:05

It sounds like the path to good pricing is an art or a science. Would you say or define it as being one of those two things?

Per: 12:14

It is science, it's not art at all, and I mentioned in the beginning that I developed a process to make sure that every pricing experiment is successful and that is based on going out to a company's marketplace and understand from something called pricing research, which is a very different kind of online market research, and understand from that the exact prices that that market is willing to pay for a product or service, and then further understanding how a company's customer targeting affects how they can set prices, how the company's customer targeting affects how they can set prices, how the company's what features and benefits of a product or service that drives the ability to price for higher sales volume and higher profits. How the different marketing channels and marketing messages and sales methodologies and sales channels and so forth all affect the ability to set prices for maximum sales volume and maximum profitability.

Carl: 13:23

So can every company improve their pricing, then Are there opportunities there.

Per: 13:27

We've had something like 800 or so client engagements. We've had something like 800 or so client engagements and that then leading to conducting this process I just mentioned for somewhere, I would guess, about 5,000 different products or services and during that time, less than half a dozen of times, we have found that the company's existing price was the right price.

Carl: 13:56

Wow, so they're spot on then.

Per: 14:00

Yeah, they were spot on, and many times those were companies with multiple products or multiple services, and three of their six products may have been overpriced, two of them were underpriced and one was spot on.

Carl: 14:16

What are some tips or strategies, then, that people can start applying to better price their products and services?

Per: 14:36

customers or from buyers, I should say what made them buy and what specific value they see with a company's product or service. And if you're a small company or if you're just starting out, there's actually a way you can do this without using service providers like my company. And what you will do in this case is that you will identify at least 25 prospects. Now, those are not your, it's not friends and family, it is not your existing prospects, it is not your existing customers, and what you'll do is that you go to these people and you describe your product or your service, and you do this without using any names, so it's sort of anonymous. And then you ask that prospect.

Per: 15:27

Two questions, questions, and the first question is now Mr Prospect, when you understand our product or service, what is a price for this that is so low? You think that we are over promising and going to under deliver and for that reason you wouldn't buy. And then you continue with one more question and you say and now, Mr Prospect, let's look at this from the flip side. Assuming now that we are under promising and going to massively over deliver, what is still a price that is so high that you would not buy our product or service. Then you take the average of those two points and when you've done that, you suddenly have a range of price. It should not be below that price and it should not be above that price. Below that price and it should not be above that price and you then probably want to price yourselves towards the high end of that range.

Per: 16:39

And when you ask these questions from these 25 people, there's going to be outliers. There's going to be people to say that yeah, I'm happy to buy this pen for a million bucks. Those should be just eliminated, obviously. So it should be 25 people that are within a reasonable range of what the product or service is. If you're a startup, if you can't find those 25, you have bigger problems than pricing.

Carl: 17:15

You need to get those 25.

Per: 17:17

At least 25. I mean, more is better and if this is a process that works, you can continue with the same questions and add some information about these people. Some information about these people, and when you have like 75 of those, you can start seeing, maybe, differences. If this is a consumer product, you may see maybe that females have a different willingness or range I should say that are different than men or that age make a difference in that range. Or if it's B2B, maybe the size of a company or the industry start to make a difference, or the title of the person, and then you can start honing in on focusing your business on where you can have the highest possible sales volume at the most profitable prices.

Carl: 18:16

I was going to ask you if it mattered whether or not a company was B2B or B2C when it comes to pricing Is the problem?

Per: 18:22

No, it doesn't. I mean, how do you do this? If you're a B2C, well, you roam your local Starbucks and you go to people. Can I ask you two questions? Maybe two out of 10 will say yes, right. And if it's B2B, maybe this is something you reach out on LinkedIn to people. Can I ask you two questions?

Carl: 18:47

Does it make a difference with pricing if you're a solopreneur, or are the principles again? Are the principles still the same, regardless of the company size?

Per: 18:59

It is always the same, always. This was first established in the early 1900s, in B2B sales actually, where there was a gentleman called Torsten Veblen. He was one of the leading intellectuals at the time and he discovered that if you price your office supplies too low, your sales volume is not going to be as high as if you price them higher. That is something that in behavioral economics very interesting stuff to read about. But behavioral economics says that price sets an expectation of quality and benefit and if the price is too low we're not going to buy it because we don't think it's going to be any good. And we've all been there, right. We hold something in our hands, physically or metaphysically, and we say I want to buy this, but at this price it's so cheap it can't possibly be any good.

Carl: 20:03

Unless cheap is what you're looking for, in which case you're going to buy it Still to a point.

Per: 20:11

It was kind of interesting still to a point. It was kind of interesting many years ago when Walmart had this. They had this tagline of lower prices, all lower prices, right, and that eventually became so efficient in convincing people potential buyers that what they were selling were not very good quality. So they were starting to see a decline in same-store sales and what happened as a result of that was a rebranding and a new tagline which is something of Live Better I can't really remember which is what they use today and once they've changed that tagline from being purely low prices, same-store sales start to recover.

Carl: 21:00

Wow. So even the companies who are historically known for lower prices recognize that, if they emphasize that, that it can have a negative impact on their sales.

Per: 21:15

And also a long time ago I had a conversation with the CEO of one of the dollar stores and he said we have to deliver good quality despite our low prices, because otherwise people won't come back.

Carl: 21:36

So I had another question how much of pricing can also be based on experience? Thinking of myself, for example, I base a certain degree of my pricing on 25 years experience in media and communications. And so when you buy from me, when you buy into my services, you're not just buying a podcast editor, you're buying my experience. How much of that should be factored in or is factored in? How much of that is factored into pricing?

Per: 22:03

Well, your experience is going to be relevant for a certain portion of your marketplace. It's going to be irrelevant for another portion of your marketplace. That means that, for those that see your experience as relevant, enable you to charge higher prices because they see value in your experience. The trick, then, and go back to those interviews I mentioned. The trick, then, is to do enough of those and maybe 75 is sort of a minimum number and understand what is the profile of those that sees your experience as a particular value, so that you can target those as potential customers.

Carl: 22:55

And those two questions still apply?

Per: 22:58

Absolutely yeah, and phraseology here is enormously important. It has to be said the way I said it. You cannot go and ask people what are you willing to pay? Because they will lowball? Are you willing to pay Because they will lowball? You have to say now, when you understand my product or service and also in your case, what makes me specifically different. What is a price where you think we are going to over-promise and under-deliver and for that reason you would not buy? What is a price where you think we will under promise and maximally over deliver and yet it's so expensive you still don't want to buy it or cannot buy it.

Carl: 23:45

So the wording becomes very important, as is a lot of things. If you're not positioning yourself accordingly, you're not going to attract the right audience to begin with, so that becomes very important. Per, this has been an amazing conversation. Today I want to give you the opportunity to draw people to the book. It's an amazing book, so share with people where they can find it.

Per: 24:08

Yeah, the book here is called the Price Whisperer, just as my moniker. The subtitle is more important. The subtitle says A Holistic Approach to Pricing Power and you will find the book. You will find me, my company, my YouTube channel and all different things by just Googling the Price Whisperer, because I got a wacky name. If nothing else, and if you Google that, you should get about 10 million hits or so.

Carl: 24:40

And we're going to put the links in the show Per notes Sjofors anyhow, for all of that information. But if you are heading out and you're not able to write any of this information down, you just need to remember the Price Whisperer and you will find pair show force pair. It's been an amazing conversation. Before I turn you loose, though, I want to give you the opportunity to give the final thought.

Per: 25:02

Well, final Carl, when it comes to pricing, you can always increase prices, Always. If it doesn't work, you can always revert. That's how simple it is. If it works well, increase them again. It's not scientific in any way, but you can always try. But obviously you need to monitor your sales volume very, very closely and obviously there is going to be eventually something called a price wall where you cannot increase your prices any further.

Carl: 25:36

I think that's a great place to leave it Dom Carillo Forrest, thank you so Nathan much for being my guest today. carlspeaks.. c

Per: 25:41

Thank you, Cole. It's been a pleasure and I hope the audience got some nuggets of information here they appreciate, and thank you for joining us today.

Carl: 25:49

Special thanks to our producer and production lead, dom Coriglio, our music guru, nathan Simon, and the person who works the arms all of our arms, actually my trusty assistant, stephanie Gaffour. If you like what you heard today, leave us a comment and a review and be sure to share it with your friends. If you don't like what you heard, please share it with your enemies. Oh, and if you have a suggestion of someone who you think would make an amazing guest on the show, let us know about it. Drop us an email, askcarl at carlspeaksca. Don't forget to follow us on LinkedIn and Twitter as well. You'll find all those links in the show notes, and if you're ready to take the plunge and join the over 3 million people who have said yes to podcasting, let's have a conversation. We'll show you the simplest way to get into the podcasting space, because, after all, we're podcast. Solutions made simple. We'll catch you next time.