In an era where price transparency is expected and fierce competition prevails across every market segment, the concept of an “acceptable price” has become a central strategic concern for brands. But how can a price be set that is both sustainable for the business and perceived as fair by the consumer ?
Understanding the notion of an acceptable price
The acceptable price is the amount a consumer is willing to pay for a product or service while still feeling they are getting a good deal. This price fluctuates based on several factors: perceived value, economic context, psychological anchoring, and competitor pricing strategies.
Unlike cost-based pricing or target-margin pricing, the acceptable price relies on a delicate balance between customer perception and value proposition. A price perceived as too high may drive customers away, while a price that is too low can harm the perceived quality of the product.
Factors influencing the perception of an acceptable price
1. Psychological anchoring
Consumers assess prices not in absolute terms, but relative to mental benchmarks. A smartphone priced at €799 may seem expensive—unless it is compared to a premium model priced at €1,299.
2. Scarcity and urgency effects
A price can become more acceptable if the product is seen as exclusive or available in limited quantities. This is a common lever in flash sales and special editions.
3. Perceived quality
A price that is too low may raise doubts about the product’s quality. Luxury goods illustrate this perfectly: a high price reinforces the perception of exclusivity and superior value.
4. Economic context
During times of inflation or crisis, consumers become more price-sensitive and adjust their perception of what is acceptable.
Strategies for defining an acceptable price
- Psychological price studies : consumers have psychological thresholds that shape their perception of prices. Two concepts are key: the acceptability threshold and the rejection threshold. The acceptability threshold is the maximum price a consumer is willing to pay without feeling it is unfair. The rejection threshold is the point at which a price becomes so high or so low that it triggers mistrust. Brands must identify these thresholds through market research and consumer testing to optimize pricing.
- Price Testing : experimenting with different price levels helps observe consumer reactions and refine strategy accordingly. Approaches like A/B testing (where two versions of a product are offered to different market segments) or price sensitivity analysis (via surveys or behavioral analysis) allow companies to identify the ideal price that maximizes sales while preserving a positive brand perception.
- Value enhancement : rather than lowering prices—an approach that can erode profitability and brand perception—it is often more effective to increase perceived value. This can be achieved through:
- Premium customer service, providing high-quality support and personalized assistance
- Extended warranties, reassuring customers about product durability and reliability
- Personalization, fostering a stronger emotional attachment to the product and justifying a higher price
- Additional services, such as free delivery, exclusive subscriptions, or loyalty programs
- Dynamic Pricing : with the rise of e-commerce and real-time data analysis, dynamic pricing has become a powerful tool. It involves adjusting prices based on various factors, such as :
- Demand : prices may rise if a product becomes popular or inventory runs low
- Consumer behavior : algorithms can identify profiles willing to pay more and adjust pricing accordingly
- Seasonality : certain periods, like holidays, can justify higher prices
- Competition : reactively pricing based on competitor offers ensures competitiveness while protecting margins
Toward a fair, strategic, and acceptable price
The acceptable price is not a fixed number, but an evolving construct shaped by the market, consumer trends, and brand perception. True pricing strategy lies not only in setting a figure, but in shaping a context in which that price is seen as legitimate and desirable by the consumer.
Brands that master this subtle art do not merely sell a product—they deliver an experience, a promise and a perceived value at its peak.
