How Price Creates Belief

Betty Peto is a dog groomer who works from her home. In 2024, she wrote on her Substack about how she started, about 14 years earlier. She was desperate to fill her calendar, and she would take anyone with a dog. Her prices were so low that she was soon overbooked, working six days a week. She now calls them “insane low prices.”

She wanted to earn more and work less, but she kept putting off a price increase. In her words, “I lacked the confidence and the words to explain a higher price to my clients.”

Today she can describe exactly who she wants as a client. She puts clients who are a bad fit on a no-book list.

In the same post, she sorts the people looking for a groomer into three groups. The first group wants a bargain. The second wants quality and will pay for it. The third wants quality and an experience for the dog and for themselves.

To the second group, Peto writes, “higher prices suggest a better quality and it will not deter, but attract them.” The third group knows “high-quality work comes with a hefty price tag so to save time on research, Group 3 people sort by price, high to low.” She spells out what that means for a groomer who charges too little. “If you are not charging enough, you won’t make the list, let alone the shortlist when they are looking for a groomer,” she writes.

A client who sorts groomers from the highest price down is not being careless. They are using the price to answer a question they cannot answer any other way. The question is how good the work will be.

The same wine tasted better with a higher price on it

In 2008, researchers at Caltech and Stanford asked 20 volunteers to taste five wines. Each wine was labeled with a retail price of $5, $10, $35, $45, or $90 a bottle. While the volunteers tasted, a scanner recorded the activity in their brains.

The volunteers said they liked the $90 wine better than the $5 one, and the $45 wine better than the $35 one. There was a catch. They had tasted only three wines, because two of them were served twice under different prices. One wine was labeled $90, its real price, and also $10. The volunteers loved it at $90 and liked it much less at $10.

The scans showed the same pattern. One part of the brain is thought to register how pleasant an experience is. It was more active when the volunteers believed the wine cost more. Later, the volunteers tasted all five wines again with no prices at all. This time, they liked the cheapest one best.

People who paid less for the same drink got less from it

In 2005, Baba Shiv, Ziv Carmon, and Dan Ariely ran three experiments with an energy drink. The drink was meant to sharpen the mind. Some people paid the regular price for it, and others paid a discounted price. The people who paid the discounted price solved fewer puzzles afterward, though they drank the same drink. The researchers traced the gap to what people expected the drink to do for them.

A client cannot see your work, so the price tells them about it

The link between price and quality does not rest on one or two studies. In 1989, Akshay Rao and Kent Monroe brought together the experiments on price and quality. For the consumer products in those experiments, people judged a higher-priced product to be of higher quality. The link was unlikely to be chance.

These studies used wine, drinks, and products in shops. The step from a product to a service is the course’s own, and here is the step. A client cannot see your work before they hire you. So they take your price as a report on how good your work is. That is how price creates belief.

A client takes a higher price as a sign of better work. Peto’s third group shows it in the way they search, from the highest price down. So set your price where the clients you want expect to find you.

A coach who cut her price worried that buyers would doubt it

In 2025, Lucy Squire, a mindfulness coach, wrote that she was dropping the price of her three-month coaching package to £600. Two years earlier, she charged £3,000 for it. She gave her reason. “I no longer need coaching to be my main source of income.” She wanted more people to be able to afford her coaching.

She was reluctant to make the cut. “If you saw a brand-new Gucci handbag for £50, you’d assume it was fake, right? That’s exactly why I hesitated,” she wrote. The package itself stayed almost the same. The only change was that texts between calls, once unlimited, now had loose time limits.

A buyer who sees a new Gucci handbag for £50 decides that it is fake. A low price also raises a question about why it is so low. In the course’s view, a client who is busy with that question does not yet trust your work. So a lower price can cost you the clients it was meant to win.

A higher price turns away the clients who want a bargain

Many professionals hold back from a higher price because some clients will leave. Peto treats the choice as the groomer’s to make. “You get to pick to be a Bentley salon or a bike shop.” People who want a bike will not go to the Bentley salon, she writes. The salon does not try to talk them into a Bentley.

She also warns about raising the price on clients who came for a bargain. When they hear the news, she writes, “bippity boppity boo you get a bad review. Or 10.” Her answer is to price in tiers, with one rate for some clients and a higher rate for others. She writes that tiers let a groomer control the flow of returning and new clients while staying booked.

So decide which clients you are pricing for. Expect the clients who want a bargain to go elsewhere, and do not try to talk them into the higher price.

What a client sees before the price has to agree with it

Before a client hires you, they judge your work by what they can see. That includes your website, your first reply, and your proposal. So the course suggests bringing each of those up to your new price before you quote it. A proposal that still lists last year’s packages makes a higher price look like a mistake.

Why giving the fee as hours goes wrong

The way you give the price is something the client sees too. In the course’s view, a price given as hours is a sum the client adds up. A client who adds up your hours has stopped taking the price as a report on your work. They are checking an invoice instead.

Imagine an interior designer named Priya Raman who has set her fee for a living room and dining room at $18,000. That is inside the range the clients she wants already pay. A new client, Mr. Castellanos, asks for a proposal. Priya has an installation the next morning, so she sends Mr. Castellanos her old proposal with the new figures in it. It shows 120 hours at $150 an hour.

Mr. Castellanos does the arithmetic. He calls Priya and says, “My sister’s designer charged $125 an hour. Could you do it in 100 hours?” Priya does not want to lose the job, so she agrees to $15,000. For the rest of the project, Mr. Castellanos checks every extra call against the clock.

Suppose instead that Priya’s proposal gives one fee. “The design of your living room and dining room is $18,000, from the first drawings to the day the furniture is in place.” Mr. Castellanos asks when the drawings will be ready. Priya says three weeks, and he signs.

How to set a price that tells clients what your work is worth

Find out what the clients you want already pay for this kind of work. Ask a few professionals who work for those clients what they charge, or look at the prices they publish. For example, a private chef might ask two chefs in her town what they charge a family for a dinner for eight.
Quote new clients a price inside that range, so that a client who sorts from the highest price down finds you. Check that the number of clients you take in a month earns what you need at that price. Only your current clients move to the new price in steps of about 15%.
Before you quote the new price, bring your website, your first reply, and your proposal up to it. Go through each one the way a stranger would, and change anything written for the old price. For example, an event planner whose first reply still offers “a smaller package for tighter budgets” takes that sentence out.
Give your fee as one figure, in a sentence, with what it covers in a few words. When the work is a project, leave out the hours and the hourly rate behind the figure. For example, a family photographer can say, “The portraits are $3,500, from the planning call to the finished album.”
After the figure, say when the work would start, and stop. Leave out reasons and apologies, and let the client be the next to speak.
Quote the new price to new clients first, because they have never heard the old one. Move current clients on a later date that you tell them months ahead. For example, a tutor whose new price starts on September 1 quotes it to the first family that calls after that date.

Next: You will see how a client uses your name the way they use your price, as a shortcut. A reputation does for a person what a brand does for a company.