3 Pricing Myths That Are Costing Your Business Millions of Dollars

Richard Minney
May 5
3 min read

By Richard Minney

In the world of the project-based industry, pricing isn’t just a number, it’s a strategy. Yet too many firms are still relying on outdated beliefs that not only erode profit, but also undermine long-term value.

Here are three of the most costly pricing myths we see again and again and why it’s time to leave them behind.

Myth 1: Customers will always choose the cheapest price.

Let’s get this one out of the way: lowest price doesn’t win by default.

In complex, project-based or engineer-to-order businesses, customers don’t just look at numbers—they look at trust.

Yes, they’ll issue an RFP. Yes, they’ll compare vendors side by side. But they’re not just crunching numbers. They’re asking:

Do we trust this team to deliver?
Do they understand our industry?
Will working with them reduce our risk?

In fact, if your proposal is significantly cheaper than the competition, that can raise red flags. You may get passed over entirely because clients assume you can’t possibly deliver at that price.

“Being too cheap makes you look risky, not competitive.”

Myth 2: Cost-plus and T&M are safer pricing models.

On the surface, it makes sense: time-and-materials or cost-plus lets you charge for what you deliver, and does shift risk to the customer.

But here’s the catch:

Customers always have a budget.
And when you push risk onto them, you’re often giving up margin in return.

Think of it this way instead. A $100,000 T&M engagement could easily be sold as a $200,000 fixed-fee if you provide the confidence, clarity, and structure clients need to approve it.

“When you transfer risk to the customer, you’re also transferring margin.”

Outcome-based pricing, when done right, can deliver higher value for the client and higher margin for you. That’s a win-win.

Myth 3: You need to be the lowest bidder to win competitive deals.

This myth is deeply rooted in the fear of losing a deal. But the truth is: lowest price only wins when there’s no differentiation.

Instead of racing to the lowest price point, focus on what sets you apart:

Proven case studies
Better delivery track record
Domain expertise
Brand and trust equity

If you're a trusted expert with a stronger reputation, clients will pay more to work with you, especially on high-stakes projects.

“You don’t have to be the lowest bidder to win. You have to be the best positioned.”

So What’s the Solution?

Value-based pricing.

It’s not just a buzzword, it’s a strategic shift. When you package your services in a way that’s:

Repeatable
Measurable
Clear in outcome

...you make it easier for your customer to understand the value you will bring and say yes to a higher price point.

You also reduce your own delivery risk, because now you’re working within a model you’ve optimized before.

In conclusion, the smartest companies aren’t just selling services, they’re selling outcomes, trust, and expertise, and they’re using pricing as a strategic lever, not a last-minute spreadsheet.

So ask yourself: