The Pain of Price
Have you ever applied an ointment to a wound and felt no sting?
When this happens, we often wonder if the ointment is actually working.
The same psychology applies to toothpaste. When companies first introduced non-burning formulas, consumers doubted their effectiveness. To fix this, brands reintroduced the burn—restoring the perception of cleanliness. Even today, natural mint toothpaste options that lack that sharp sensation can leave users feeling less fresh.
This reaction may be rooted in how we associate discomfort with effectiveness. When our mouths feel unclean, we expect an aggressive attack on bad breath. When we treat a wound, we instinctively brace for pain, as if it validates the effort to protect ourselves from bacteria.
Rationally, you’d think humans would prefer comfort—that we’d want a pain-free option that still gets the job done. Yet, the opposite is often true.
If you’ve heard me speak or read my work, you know I believe price is one of the greatest signaling devices a brand has. But price also plays a role in pain.
Skin in the Game and the Pain of Price
Nassim Taleb has written extensively about Skin in the Game—the idea that people should have direct exposure to the risks and consequences of their decisions. He applies this concept to decision-makers, but I believe it also explains how pricing affects consumer psychology.
Just as people equate sensation with effectiveness, they also equate price pain with value. This is where Skin in the Game comes into play—not just for leaders and investors, but for consumers, too.
→ Pricing should be relatively painful to the buyer. If it’s not, you’re serving the wrong consumer.
→ The consumer being exposed to some risk through pricing is the best way to ensure they have skin in the game.
When customers don’t feel the sting of price, their care and perceived value of the offering diminish drastically.
This is why discounting is a losing tactic for brands that aren’t serving low-income markets.
This is why free shipping only works for a membership model like Amazon—where the upfront fee ensures some pain, even if the transactions feel frictionless. Ironically, this has created a self-inflicted nightmare of returns.
What’s the Catch?
When we get something for a steal—when we leave no skin in the game—we instinctively assume there’s a catch.
A sacrifice in quality, service, or satisfaction. We settle.
But here’s the twist: I believe this assumption of a “catch” is self-fulfilling.
Once a customer expects a catch, they’ll find one. When something inevitably goes wrong, the blame falls squarely on price—and the brand.
→ The catch gives customers a direct line of blame.
Yes, even premium products can fail. A seam can rip, a product can break, an expectation can fall short. But here’s the difference:
When a customer has paid a painful price, they feel invested in solving the issue. Instead of seeing a problem as a “gotcha,” they feel deserving of a resolution—and rightfully so.
Some brands might find this intimidating. They may see it as entitlement.
But wouldn’t you rather have a customer knocking at your door asking for help than one who silently accepts disappointment and never returns?
→ A frustrated customer seeking a solution is an opportunity.
As unfortunate as it is when something goes wrong, great brands have protocols to turn negative moments into positive ones. Ritz-Carlton is famous for this, empowering employees to resolve guest issues up to $2,000 on the spot—without approval.
Why? Because high prices come with high expectations. And when those expectations are met (or exceeded), the brand’s perceived value soars.
The Hook Isn’t in the Customer...
I’ve owned cheap cars and expensive cars. They’ve all had issues to different degrees.
When the cheap car had problems, I blamed the piece of junk.
When the expensive car had problems, I turned to the brand—and they solved it. I expected a solution because I had skin in the game.
This is the paradox of price pain:
→ The sting of cost enables a profitable outcome for the brand.
→ Profit from price pain funds the ability to serve customers when problems arise.
Ritz-Carlton’s $2,000 rule works because their high prices create the margin to absorb those costs. This allows them to turn a frustrated guest into a lifelong advocate.
When customers feel the pain of price, brands are hooked to vindicate that pain. And that’s a good thing. It's a bit of some sunk cost theory as we feel "sunk" into the relationship with the brand due to the skin in the game.
The pain of price is immediate, but it de-risks the purchase in the long run. Customers trust that their investment is protected.
For brands, this means:
Ultimately, the pain of price doesn’t just create better customers. It creates better companies.
→ No pain, no gain.
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