What do Vegas, software companies, and my study abroad experience have in common? A lesson about identity.

I didn’t learn a whole lot during my study abroad summer in Barcelona (sorry Mom). My homestay involved plenty of paella, sangria, and hanging out with friends from UT Austin, which was oddly a feeder school for the program.

But there was one class about food in Spanish culture where a teacher said something I’ve never forgotten.

Food is not just a way of feeding yourself. What you eat is an expression of your identity.

Your kale green juice sends a message to others that you’re a healthy, active person. A greasy late-night burger sends a very different signal.

That idea stuck with me over the years. Pricing is similar. It seems like its about something mechanical. But it's actually another expression of self. This brings me, naturally, to Las Vegas.

Visits to Vegas are down nearly 8% this year. There are some thoughtful explanations for why:

Vegas has become the premier example of locations and businesses pushing nickel-and-dime pricing. 6:5 blackjack payouts. Exorbitant resort fees. $12 water bottles. Charging for late checkout. All of it layered on in the search for incremental revenue.

You can understand the incentive behind each individual fee. Someone has a directive to grow revenue. Adding a small charge is unlikely to affect conversion much. Customers won’t really notice it until they see the final bill. And at that point, what’s another couple of percent above what they expected?

In isolation, each fee is fine, even a win for the business. The problem is what happens when those cuts stack up. When customers experience five or six of them in tandem, they start to feel exploited and walk away with a sour taste that colors the entire experience.

I have no idea how much my last JetBlue flight cost. But I vividly remember the painful sting of the unexpected $40 baggage fee I paid at the airport. People remember the little things they weren’t expecting.

The real problem with nickel-and-dime pricing is that it’s almost impossible to roll back. You reach a local maximum, and giving up revenue in favor of something squishier like “customer experience” is deeply uncomfortable.

No one wants to go to the board and say revenue dropped 12% without a crystal-clear volume payoff.

When the economy is booming and you have a unique value proposition as a purveyor of sin, like Vegas does, customers tolerate nickel-and-diming. But when conditions tighten, people start looking for places to cut. And guess what comes to mind first? The place that left them with a bad taste in their mouth.

Which brings me back to that cooking class in Barcelona, with a pricing twist.

Pricing is not just a way to collect money. It’s an expression of who you are.

Pricing is a critical touchpoint in the customer journey. It shapes how customers perceive you. Are you customer-friendly, aiming to delight and surprise? Or are you difficult to work with, optimizing for your own needs first?

Vegas is now fairly perceived as a place trying to extract every possible dollar. Free drinks and comped rooms have given way to excessive fees and games that rarely pay out.

I see this at times in SaaS. Companies pricing at the absolute limit of willingness to pay, under pressure from boards to grab more revenue without increasing value.

My advice to software companies: nickel-and-dime pricing does not create long-term customer value.

The smartest companies are pricing to win the next five years, not the next quarter.

Pricing should be an extension of your brand strategy. Let customers feel like they occasionally get a small win. The goodwill you generate is often worth more than the incremental revenue you’re chasing.

The challenge is balance. Charge fairly for the value you deliver without nickel-and-diming customers to death. At the same time, don’t be so afraid of fees that you leave meaningful revenue on the table.

Your pricing strategy sets the tone for your brand. Because money is involved, people are especially sensitive to how you apply it. Pricing leaves a stronger psychological imprint than most other gestures. It’s just as important as customer service.

Great customer service paired with a bad pricing model still leaves you exposed, just like Vegas.

As Maya Angelou famously said, people will never forget how you made them feel.

We often get asked how frequently companies should adjust pricing. For most B2B organizations, the answer is still about twice a year.

That’s why Instacart’s recent controversy is worth paying attention to.

Instacart landed in hot water after customers discovered they were being charged different prices for the same product at the same store. The backlash triggered regulatory scrutiny and raised broader questions about algorithmic pricing and transparency.

What makes this more interesting is that in 2022, Instacart spent $59 million acquiring Eversight, a company focused on AI-driven pricing for retailers. This wasn’t an accidental experiment. It was a deliberate investment in automated price optimization.

We don’t know how AI will be used in pricing 20 years from now. But there are several clear lessons we can take away from this mishap today.

First, pricing must be defensible.

A simple test: imagine every customer suddenly knew exactly what everyone else was paying. Would you feel comfortable explaining the differences? Could your team articulate the logic clearly, or would it trigger confusion, anger, or a PR crisis?

Pricing only works as long as customers believe in it. That belief is built on consistency and logic. When prices feel arbitrary or hidden behind a black box, trust erodes quickly.

Second, pricing experiments need guardrails.

Testing new prices is healthy, but experiments require clear parameters. Who is being tested? Why them? What are you trying to learn? And how will you explain it if customers notice?

If an experiment leaks into the real world, you need a narrative ready. Instacart sent mixed signals about who was benefiting, why prices were changing, and what factors were driving those changes. The result made the entire effort feel like a shady, out-of-control experiment rather than a structured test.

Third, AI isn’t ready for most B2B pricing yet, but it’s coming.

Delta ran into a similar issue in August when reports surfaced about AI-driven airfare pricing. While the context differs, the theme is the same: algorithmic pricing without clear boundaries creates backlash fast.

B2C companies can at least justify AI pricing with massive transaction volume and frequent price changes. That makes experimentation statistically viable. B2B companies usually don’t have that luxury. Fewer deals, longer sales cycles, and negotiated pricing make real-time AI adjustments far harder to validate.

That said, expect this to change. As the technology improves, AI vendors will increasingly ask B2B companies to feed CRM, billing, and usage data into their systems to generate pricing recommendations.

The irony is that many SaaS organizations struggle to update pricing even twice a year. Daily or real-time adjustments would be unthinkable today. But AI won’t just optimize prices. It will give companies the confidence to change them more often.

“Your brand is what people say about you when you aren’t in the room” - Jeff Bezos

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