Why pricing needs a behavioral reset in an era of rising costs
The Observer just published Untapped Pricing’s latest article on one of the most overlooked growth levers available to leadership teams right now: behavioural pricing.
Rising costs are squeezing margins everywhere, but many businesses feel they’ve hit the ceiling on how far they can raise prices. The question we’re hearing from CEOs and CFOs is the same: If we can’t increase prices further, where does the growth come from?
Written by Untapped behavioural pricing experts, Jenny Millar and Ann Padley, our article explores the behavioural side of pricing:
- How customers interpret price
- How small cues change how a price feels
- Why thoughtful design can unlock revenue long before you touch the number itself.
In the article, we dig into:
- Price anchoring and the power of what customers see first
- Choice architecture and why the “middle” often wins
- Choice overload and the hidden cost of too much complexity
- How small, evidence-led experiments can reveal what actually shifts behaviour
We also share how these principles helped a recent client lift spend per session by 23% without raising a single price point.
If you’re looking for ways to defend margin without creating customer friction, this is a timely read.
Article excerpt
Why Pricing Needs a Behavioral Reset in an Era of Rising Costs
Published by observer.com ‧ 5 December 2025 ‧ By Ann Padley and Jenny Millar
“According to Bank of America’s recent Business Owner Report, 77 percent of business owners say their costs have risen—by an average of 18 percent—yet they’ve only raised prices by 12 percent. That six-point shortfall is quietly eroding margins, worrying investors and forcing leadership teams into reactive decisions. In many industries, raising prices enough to offset rising costs isn’t feasible. Competitive dynamics, customer expectations and economic uncertainty all cap how far and how fast prices can move.
This pressure has only intensified as core inflation remains stubborn, labor shortages drive up wage bills and consumers grow more price-sensitive after increasingly elevated living costs. Retailers are reporting customers trading down; subscription businesses are seeing higher churn; even traditionally resilient sectors like beauty and home goods have noted slower discretionary spending. These shifts mean that pricing is now a strategic capability tied directly to resilience.
So if companies aren’t raising prices enough to cover rising costs, how do they capture the value they’re losing? One answer lies in the behavioral side of pricing, or the psychological mechanisms that influence how customers perceive and evaluate price. These insights can allow companies to boost revenue without pushing prices beyond their limits.”
