Premium Pricing Has Two Sides — And Most People Only Understand One

A strategic, human, and deeply practical guide to pricing your product or service without guilt, confusion, or overwhelm.

Most pricing advice online is noisy, shallow, and honestly unhelpful. Whether you’re using a premium pricing strategy or trying to design sustainable pricing for your business, you already know the truth: pricing is never as simple as people make it sound.

“Charge your worth.”
“Just increase your prices.”
“People who want it will pay.”

But if you’re a founder, creator, coach, consultant, or operator actually trying to build something sustainable…

You already know pricing is not that simple.

Pricing is emotional.
Pricing is psychological.
Pricing is strategic.
Pricing is relational.
And pricing is deeply personal.

This week, two very different experiences reminded me just how misunderstood premium pricing really is — one rooted in relationships, the other in product design. Both offered priceless lessons.

Story 1 — The Friend Who Charges Premium for Breathing

I have a friend who, if she could, would charge a premium for breathing.
Honestly, oxygen is the only thing she hasn’t put on a rate card.

Every conversation is billable.
Every favour is transactional.
Every request becomes a negotiation.

She used to look down on me for being “too generous,” too free with my help, too willing to support people without charging.

But here’s the part people rarely talk about:
Generosity still needs boundaries.
Because without them, people mistake kindness for unlimited access.

Over the years, I’ve learned to separate compassion from self-sacrifice.
You can be generous and have strong boundaries.
You can help people and require respect for your time and capacity.
You can offer value freely without allowing anyone to take advantage.

Fast-forward to this week:
She’s now in a fix.

Someone charged her a premium she genuinely can’t afford…
And she called me to help pull in a favour — the kind of favour I can access because I’ve spent years building goodwill she never invested in.

The irony wasn’t lost on me.

Because here’s the uncomfortable truth:

If you treat every interaction like a transaction, don’t be surprised when the world responds the same way.

And it’s not just philosophy — it’s measurable.

According to Harvard Business Review people are 2–3x more likely to support, refer, or help someone they’ve had positive, non-transactional interactions with.

Goodwill is not softness.
Goodwill is strategy.
Goodwill is leverage.

And in many moments, goodwill is more powerful than money.

This moment reminded me why a premium pricing strategy must be grounded in relationships, not just numbers.

Story 2 — The Client With a Brilliant Product… and the Wrong Price

I’m advising a client with a genuinely premium product.
Beautifully constructed.
High-quality.
Feature-packed.

But his ideal customers simply cannot afford it.

Not because it’s overpriced.
But because it’s overbuilt.

The product delivers a Level 10 transformation to a Level 3 customer.

He’s afraid that offering a lighter version will “weaken” results.
But I told him the truth founders often overlook:

Not everyone needs the full orchestra on day one.
Sometimes transformation happens in levels, not loads.

A lighter version doesn’t reduce the transformation.
It reduces:

• commitment
• overwhelm
• cognitive load
• perceived risk

People aren’t avoiding the value —
they’re avoiding the level of responsibility required to experience it.

This is where most pricing problems originate.

His challenge wasn’t the product — it was the lack of a clear premium pricing strategy that matched customer readiness.

The Deeper Truth: Pricing Problems Are Usually Clarity Problems

Not confidence.
Not courage.
Not “charging your worth.”

Clarity.

Clarity about:

• who the product is truly for
• what stage the customer is in
• what outcome they are willing and able to pay for
• how they perceive risk vs reward
• how they see themselves

Because here’s a unique insight most founders miss:

You’re not just pricing your product — you’re pricing your customer’s self-image.

People buy to confirm identity:

• “I’m the kind of founder who invests in growth.”
• “I’m the kind of parent who prioritises learning.”
• “I’m the kind of leader who wants clarity and speed.”

Pricing is a mirror — and the customer chooses the version of themselves they want to see reflected.

The Psychology Behind Premium Pricing

Premium pricing isn’t about “charging more.”
It’s about:

1. Reduction

Premium = reduced stress, reduced effort, reduced confusion, reduced risk.
People pay more to feel less.

2. Loss Aversion

Nobel Prize–winning behavioural economics proves:

People are twice as motivated to avoid loss as they are to gain a benefit.

Premium pricing often reflects the cost of getting it wrong, not the cost of getting it right.

3. Context Windows

A $600 offer is expensive to someone earning $900/month…
but not to someone earning $8,000/month.

4. Identity Signalling

Price communicates:

• category
• confidence
• seriousness
• expected outcomes

Price is a brand signal long before it’s a revenue number.

The Emotional Tax of Underpricing Is More Expensive Than Raising Your Price

Founders fear increasing their prices.

But the real danger is:

• resentment
• burnout
• emotional fatigue
• over-delivery
• financial stress

Underpricing forces you into emotional debt. And emotional debt is always repaid with burnout.

Raising your price isn’t the risk.
Staying at the wrong price is.

You Can’t Price Yourself Out of Rejection

Whether your service is $20 or $2,000 — someone will still say no.

The fear of pushback shouldn’t shape your pricing strategy.

A no at $20 and a no at $2,000 cost you the same.
But a yes at $2,000 changes your business.

4 Proven Pricing Frameworks

And when to use each.

1. The Four-Tier Value Ladder (Including Free Tier)

Best for: early-stage founders, creators, SaaS, coaching, consulting, digital products.

Why it works: builds trust → reduces risk → increases conversions.
According to the Edelman Trust Barometer
(https://www.edelman.com/trust),
customers are 4x more likely to buy from brands that provide upfront value.

Use this framework when:

• customers say “I’m not ready yet”
• price objections are common
• you want to serve multiple segments
• your product feels “too heavy”
• you need both accessibility and premium tiers

Structure:

1. Free Tier — Build trust
2. Entry Tier — Make it easy to start
3. Growth Tier — Full solution
4. Premium Tier — High-touch, high-speed

2. The 1–3–1 Pricing Model (Behavioural Economics)

Best for: coaching programs, SaaS, consulting, agencies, online courses.

Why it works: customers convert best when offered structured choice without overwhelm.

Use this framework when:

• customers ask for options
• you’re losing sales because your offer feels rigid
• you want to anchor your premium offer
• your pricing feels confusing

Structure:

• 1 simple entry offer
• 3 middle offers
• 1 premium offer

3. The Outcome-to-Price Ratio (Value-Based Pricing)

Best for: consultants, agencies, B2B services, high-ticket programs.

Why it works: prices transformation, not features.

McKinsey research shows value-based pricing increases revenue by 6–8% annually.

Use this framework when:

• you deliver measurable results
• you’re undercharging for high-impact work
• your work saves time, money, or risk

Structure:

Price = value of outcome (time saved + revenue earned + risk avoided)

4. The Stages of Readiness Method (Empathy-Driven Pricing)

Best for: learning products, coaching, behaviour change, personal development, SaaS with adoption curves.

Why it works: matches pricing to customer maturity.

Use this framework when:

• customers love your product but can’t commit
• you’re attracting the right people at the wrong time
• your premium version is too advanced for beginners

Structure:

• Stage 1 → Free
• Stage 2 → Entry
• Stage 3 → Growth
• Stage 4 → Premium

The Product Isn’t Too Expensive — the Story Is Too Small

When your narrative doesn’t match your transformation, your price feels unjustified.

Your price isn’t the problem.
Your story is still catching up to your value.

Most Pricing Problems Are Positioning Problems

Here’s a diagnostic shortcut:

If your product is “too expensive,” the value is unclear.
If your product is “too cheap,” the category is unclear.

Clarity solves both.

The Future of Pricing Is Compassionate, Strategic, and Customer-Aware

You don’t have to choose between:

• being accessible
• being premium
• being profitable
• or being generous

The best pricing strategies honour:

• your value
• your energy
• your customer’s readiness
• your boundaries
• and your long-term sustainability

Premium is power.
Goodwill is leverage.
Empathy is strategy.
Boundaries are protection.
Clarity is freedom.

When your pricing reflects all five, your business becomes both sustainable and scalable.