Bad Decisions in Business Have Consequences—Especially Around Pricing

Every business decision you make has consequences. And when it comes to pricing, packaging, and monetization—bad decisions can have serious, lasting impacts.

At Applied Frameworks, we’ve helped companies around the globe apply Profit Streams™ to fix  costly missteps in their pricing strategy. And while every situation is unique, we’ve noticed a clear pattern: there are a few critical decisions that consistently lead to poor outcomes that when approached differently can be changed to create much better results

Below, we’ll walk through five of the most damaging pricing-related decisions business leaders make—and how to avoid them using the Profit Streams™ framework.

1. Underpricing Your Product

Underpricing might feel safe. It can help you win early customers, avoid objections, and gain market share quickly.

But here’s the truth: underpricing is one of the fastest ways to destroy long-term profitability.

It anchors your perceived value far below what it’s actually worth. It reduces your margin for reinvestment. And it sends the message that your solution is cheap, not valuable.

Worse, underpricing is hard to undo. Raising prices later—after you’ve trained your customers to expect a discount—is far more difficult than charging appropriately from the start.

Instead, price based on value delivered, not internal costs or competitor benchmarks. When customers understand the outcomes you help them achieve, price becomes a reflection of that value—not a barrier to adoption.

2. Poor Packaging Strategy (Especially Good-Better-Best)

One of the most common and costly mistakes we see? Using Good-Better-Best pricing instead of segment-based packaging.

Good-Better-Best sounds simple—and that’s the problem. It’s often implemented as a one-size-fits-all solution, where features are arbitrarily split across tiers without deep consideration of customer needs.

What happens?

• Customers in your high-value segments may churn or under-buy.
• Sales teams struggle to justify tier differences.
• You leave money on the table by not aligning packages to real customer outcomes.

Instead, design packaging around defined customer segments. Ask:

• What are the primary outcomes this segment is solving for?
• What capabilities do they truly need?
• What metrics matter to them?

This intentional design ensures that your offers match the value your customers expect—and are willing to pay for.

3. Choosing the Wrong Licensing Model

We can’t stress this one enough: improper licensing models can break your business.

We’ve seen this firsthand. Many of the worst pricing problems we’ve been brought in to fix were rooted in a poorly chosen licensing model.

A bad licensing model:

• Caps revenue potential
• Creates friction for customers
• Limits adoption
• Confuses buyers
• Fails to align pricing with value

Examples include charging per seat when value is delivered at a team or organization level—or charging flat fees when usage-based pricing would better align with customer growth.

The right licensing model creates a win-win: customers pay in a way that reflects the value they receive, and your business scales in proportion to that success.

We help teams select licensing models that reflect product usage, customer value, and business goals—so pricing becomes an enabler of growth, not a constraint.

4. Ignoring Intangible Value

You might know the tangible benefits your product offers—time savings, automation, cost reduction. But have you accounted for the intangible value?

Think:

• Peace of mind
• Risk reduction
• Simplicity
• Trust
• Brand association
• Strategic alignment

These are often the real reasons customers buy.

When you ignore intangible value, you risk underpricing, over-discounting, and failing to differentiate from your competitors.

Your value proposition must go beyond the feature list. It should reflect the full spectrum of what your product enables—both seen and unseen.

5. Not Evolving Your Business Model Over Time

Software doesn’t stand still—and neither should your monetization strategy.

Failing to adjust your business model over the full lifecycle of your product is a surefire way to stagnate or fall behind.

We see this often in legacy companies that haven’t adapted to SaaS pricing models—or in startups that stick with the same packaging they launched with, even as their customer base changes.

Markets evolve. Customers mature. Product value increases. Your business model should evolve alongside them.

With Profit Streams™, we teach product and pricing teams how to assess, evolve, and optimize their monetization strategy across the entire solution lifecycle—from initial launch through mainstream adoption and beyond.

How to Make Smarter, More Profitable Decisions

The good news? These mistakes are avoidable—with the right tools and frameworks.

The Profit Streams™ framework was designed to help product and business leaders make better decisions around pricing, packaging, and value. We help you:

• Identify and segment your customers based on real needs
• Design value-aligned offers that drive adoption and revenue
• Choose licensing and pricing models that scale
• Understand both the tangible and intangible value you deliver
• Evolve your business model over time for long-term growth

We’ve taught this framework to thousands of practitioners around the world. And we’ve built a global network of Profit Streams™ Certified Partners who can guide teams through every step of the journey.

Want to Get Started?

If any of these mistakes feel familiar—or if you want to proactively avoid them—here’s how to dive deeper:

Read the Book: Software Profit Streams™ is your blueprint for profitable pricing in the software world. It’s packed with real-world examples, step-by-step guides, and practical tools.

Listen to the Podcast: The Profit Streams Podcast explores pricing wins, product strategy, and monetization insights from global experts and business leaders.

Explore Profit Streams™ / Work with a Certified Partner: Our global network of Profit Streams™ Certified Partners is available to guide you through implementation—whether you're a startup, scale-up, or enterprise team.