How to set prices with four questions

The interview is in Spanish. This summary is in English.

Ana Salazar, partner at Prisier, spoke with David Llano on Dinstinto, an entrepreneurship and business podcast. Ana has worked in pricing for 20 years: she started at Bavaria, continued at SABMiller in several countries in the region and moved to Coca-Cola. Eight years ago she left multinationals to bring the same principles to companies of all sizes.

1. Price is the most sensitive profit lever

If a company could improve a single variable of its income statement by 1% (volume, price, variable costs or fixed costs), most would choose volume. According to the calculations Ana cites, 1% more volume increases profit by 3% on average; 1% more price increases it by 11%. Watch at minute 4:00.

Every price point I am not taking, that I am leaving on the table, may represent a loss of 11% of my profit. (translated from Spanish)

Even so, price is the least studied variable. In Latin America, fewer than 10% of business programs include pricing in their curriculum. The price impact on profit calculator makes this calculation with each company's data.

2. Three common ways to set prices and their risks

Ana compares competitor-based pricing to a hall of mirrors, where each mirror has a small distortion that is amplified when they are placed facing each other. If one company decides to be 10% below another and the other decides to match it, the cycle ends in a price war. Watch at minute 9:15.

3. Price wars

According to Ana, the consumer also loses in a price war. When all companies lose profit, they first sacrifice quality, then innovation and, if the war continues, entire industries and jobs. A Harvard analysis of the 1992 airline price war in the United States found that in one year the industry wiped out the profits accumulated since its beginning. Watch at minute 13:46.

Winning a price war requires four conditions at once:

1. A low-differentiation industry, where the customer switches suppliers without barriers.
2. Growth potential, either in the category or in market share.
3. Economies of scale: each additional unit must cost less than the previous one.
4. High starting margins, so they can be sacrificed.

Ana went through one at Coca-Cola in Peru, against Pepsi: recovering previous price levels took three years.

4. Value-based pricing

Customers pay for functional and emotional benefits. Water quenches thirst and can communicate a healthy lifestyle or exclusivity. Those with the same needs value the same things and are willing to pay in the same way. Watch at minute 19:56.

Price is never a need. Nobody ever buys on price. Among the available options, I choose the one with the best price-value ratio for me.

Expensive or cheap depends on whether the benefit exceeds the economic sacrifice. A frozen lemonade at 6 in the morning in Bogotá is worth little; at 2 in the afternoon in Barranquilla, much more. Perceived value also changes by customer type, occasion and channel: the same coffee brand can cost more in its own store, where tourists looking for an experience or a gift buy, than in the supermarket, where it competes with more options.

For Ana, prices must be perceived as fair. Charging a captive customer more because of their situation destroys repurchase and trust. The full method is in how to apply value-based pricing.

5. The four price questions

The four questions are answered in order. Watch at minute 30:54.

What for?

Price is a tool to make my business strategy happen. I have to know what my business strategy is to know what my pricing strategy is.

A price to gain market share is different from one to maximize margin, and one to generate trial is different from one to generate repurchase. PlayStation loses money on consoles and makes money on games. Without this agreement, sales, finance and marketing pursue different objectives. The question is reviewed at least once a year and every time market conditions change.

For whom?

Segmentation useful for pricing groups customers by needs. A company that sells artificial intelligence agents serves at least three segments: those who want to reduce costs, those who want to increase sales and those who need to document and comply with processes. Each one values and pays differently. The minimum is to ask customers what they need; if that is not possible, work with hypotheses on why customers buy in the category, from the company or from competitors.

Why?

Added value is only added value if the customer pays more for it. In wine, origin justifies price differences and grape variety remains a matter of taste. Ana proposes rating each attribute, the company's own and competitors', by importance to the customer and by willingness to pay:

An ice cream shop that sells a base and charges separately for sauces, toppings and special versions applies this logic. The customer who wants to pay less chooses fewer attributes or a smaller size. The Value Map tool helps organize these attributes against competitors.

How much?

90% of the problems you think are price problems are not price problems, they are portfolio problems.

With the three previous answers, the figure is narrowed down. The rest is experimentation, versions and feedback from customers and the sales team. Ana's example is Chocorramo: by launching a bag with only the corners, it went from about 35 to 76 pesos per gram without raising the price of the original product.

6. Portfolio and different brands

With a single product and a single price, the customer has three options: buy, leave or haggle. Only the first serves the company. That is why Ana recommends thinking of the business as a portfolio from the start. Watch at minute 49:02.

When offering versions to different segments, the condition is that natural barriers exist to prevent those who buy the expensive version from moving to the cheap one without friction. Corona is a mass brand in Mexico and a premium brand in the rest of the world. A manufacturer of anti-corrosion paint found that the automotive industry valued it more than the metalworking industry; it opened another business to sell painted parts to that industry.

7. How to charge

After how much comes the most profitable question: how to charge, with what unit and what metric. Watch at minute 52:35. Zipcar changed the unit and rented cars by the hour. Allstate changed the metric and charged insurance per kilometer driven.

The more aligned my incentive is with the customer's incentive, the greater that ability to charge will be.

Charging by tokens works like a taximeter: nothing gives the provider an incentive to take the shortest route. Charging for savings generated or for qualified leads brings the price closer to the customer's result. The model must capture market opportunities and remain executable. If the salesperson needs a scientific calculator or the customer does not understand how they are charged, it is too complex.

In tiered plans, each plan must respond to a needs segment, with the attributes that segment values and only those. Differences between plans are justified by the value each segment perceives. This work is part of pricing strategy and architecture.

8. Communicating price

The strategy is worth as much as its execution. Prices ending in 9 work because the brain reads from left to right and anchors on the first digit; round prices convey trust; a precise figure such as 25,740 suggests a calculation behind it. Watch at minute 1:01:20.

More important is speaking in the customer's words. A men's underwear brand, the most expensive in its market, explained its value with the names of its technical fabrics. Buyers described the product by its comfort, softness and freshness. When the message was changed in a pilot store, sales rose 34% without touching the price.

Value is not what I give, it is what the customer perceives.

The best time to justify a price is during the commercial relationship, before renewal. Canva, after an increase of almost 50% in some plans, shows each user how much they have saved with their plan.

9. How to change prices

Some price points anchor the company: a 600-peso product that can only rise in steps of 100 pesos faces a minimum increase of about 17%. Communicating a fixed price in advertising helps position it and makes it harder to move later. Customers prefer small, frequent increases to large, sporadic ones. Watch at minute 1:06:58.

There are ways to raise price without raising the list: reducing discounts, shifting the mix toward higher-value products or toward more profitable channels. For B2B customers, Ana proposes a two-axis matrix: how much the price must rise for each customer and how easy it will be to do so. Where the need is high and the ease is low, the relationship is reviewed and the negotiation moves up a level.

10. The role of discounts

According to the figure Ana cites, 76% of companies say their priority in 2025 is to reduce their dependence on discounts. Watch at minute 1:11:49.

I give discounts to change a behavior of my customers.

Buying more, buying more often, paying earlier, signing a longer contract or trying another line of the portfolio are valid reasons. Giving discounts on Black Friday only to sell trades expensive volume for cheap volume and pulls forward sales that are later missing. If the discount generates a database, product trial or repurchase, it can make sense. The discount breakeven calculator gives the minimum volume a promotion must generate.

11. Common mistakes

• Theoretical prices. Lists nobody pays because the product is always on discount. The real price has to be recognized.
• Not reviewing price. Companies that review prices every quarter achieve 5% more profit than those that do so once a year.
• Charging units misaligned with the customer. Charging by the hour discourages the customer from calling their lawyer or consultant precisely when they need them most.
• Not localizing prices. Converting one country's price with the exchange rate ignores each market's willingness to pay. According to Ana, companies that localize prices have 30% more revenue.

Watch at minute 1:14:38.

12. Price by channel

In response to a listener's question, Ana explained the price route: first the optimal price for the end buyer is defined, and then the work goes backward with each channel's margins. The final price should be as standard as possible across channels, because the buyer compares. Margins are negotiated like a discount: in exchange for what each channel contributes, whether volume or brand exposure. Watch at minute 1:24:51.

Episode chapters

• 0:00 Intro
• 1:30 Who Ana Salazar is and her experience in pricing
• 6:20 The importance and impact of price
• 9:15 How to set prices
• 30:54 The 4 questions to understand price
• 35:09 What for? Price is a tool
• 37:26 For whom? Understanding the ideal customer
• 39:41 Why? The reason to pay
• 44:42 How much? The final figure
• 49:02 Building different brands
• 52:35 Monetization models
• 1:01:20 Communication in pricing
• 1:06:58 How to change prices
• 1:11:49 The role of discounts
• 1:14:38 Most common mistakes
• 1:20:54 Quick questions
• 1:28:53 Zig zag