Pricing Memo Template
A one-page document that forces clarity about what you charge and why.
A pricing memo template is the one-page document that captures why the price is what it is, who it is for, and how it should change over time. The founders who write pricing memos avoid the pricing debates that distract the team. The founders who do not write memos revisit pricing conversations whenever a customer challenges the price. The memo is the protective mechanism against the most common pricing mistake: setting prices based on the latest conversation instead of the original reasoning.
In short
- • A pricing memo template has seven sections: customer segment (who is this price for), value delivered (what the customer gains), cost structure (what it costs to serve this customer), price (the specific number), comparison to alternatives (where this sits in the market), rationale (why this price is right), and trigger to change (what would cause a revision).
- • The founders who fill out all seven sections have a defensible price. The founders who only fill out the customer and price sections get challenged frequently. The complete memo is harder to argue with than the incomplete one.
- • Write the memo before you publish the price, not after. The act of writing forces the reasoning to be explicit. The founders who write retroactively to justify an already-set price produce rationalisations. The founders who write first and publish second produce clarity.
The template structure
A pricing memo template has seven sections: customer segment (who is this price for), value delivered (what the customer gains), cost structure (what it costs to serve this customer), price (the specific number), comparison to alternatives (where this sits in the market), rationale (why this price is right), and trigger to change (what would cause a revision).
The founders who fill out all seven sections have a defensible price. The founders who only fill out the customer and price sections get challenged frequently. The complete memo is harder to argue with than the incomplete one.
Writing the memo
Write the memo before you publish the price, not after. The act of writing forces the reasoning to be explicit. The founders who write retroactively to justify an already-set price produce rationalisations. The founders who write first and publish second produce clarity.
Involve the team in reviewing the memo. The founders who get the team's input find weak spots in the reasoning before publishing. The team members who have input on the reasoning can defend the price when customers challenge it.
Using the memo
Reference the memo in every pricing conversation. When a customer asks for a discount, ask "what would change the value delivered that would justify the lower price?" The founders who use the memo stay disciplined. The founders who discount based on emotion erode the pricing strategy.
Update the memo when the market or the product changes materially. The founders who update the memo annually review whether the price still makes sense. The founders who update quarterly are more responsive to market shifts. The founders who never update the memo keep the same price as the market evolves around them.
How to use this tool
Use Pricing Memo Template as a working document, not as a scorecard. Start by defining the decision or problem it is meant to clarify.
1. Set the context
Write the situation, owner, objective, time horizon and constraints. Do not fill a field just because the template has one; mark it unknown when evidence is missing.
2. Gather the inputs
Use the smallest set of real inputs needed to make the decision. Prefer customer evidence, financial records, observed behaviour and documented commitments over assumptions.
3. Complete the tool
Fill each section with a concrete observation or decision. Where two answers conflict, record the conflict instead of averaging it away.
4. Make the decision visible
End with: decision, owner, next action, deadline, risk, and what would change the decision.
5. Review after use
Return to the document after the relevant period and compare the original assumptions with what actually happened. Keep the lesson, not just the completed form.
Common misuse
Do not use a completed template as evidence that the underlying problem has been solved. The tool improves thinking and consistency; the business result still has to be observed.
Take it into your work
Do something with what you just read.
Save it for later, mark the passage that matters, or open your SOE workspace and keep thinking.
Takeaways
What to carry forward
- → Involve the team in reviewing the memo. The founders who get the team's input find weak spots in the reasoning before publishing. The team members who have input on the reasoning can defend the price when customers challenge it.
- → Reference the memo in every pricing conversation. When a customer asks for a discount, ask "what would change the value delivered that would justify the lower price?" The founders who use the memo stay disciplined. The founders who discount based on emotion erode the pricing strategy.
- → Update the memo when the market or the product changes materially. The founders who update the memo annually review whether the price still makes sense. The founders who update quarterly are more responsive to market shifts. The founders who never update the memo keep the same price as the market evolves around them.
Use the pricing memo template. Write before publishing. Get team input. Reference it in pricing conversations. Update when the market changes. The founders who do this avoid the pricing debates that distract the team.