A manager who has been setting prices for fifteen years rarely opens a spreadsheet to revisit the first mistake they made. But that mistake stays with them: in their skepticism toward an overly high markup on an undifferentiated product, in their instinct to ask "who does this compete with?" before settling on a price, and in their automatic refusal to repeat a promotion that proved costly in the past. None of this is written down. It has become second nature.
The problem is that this kind of expertise is fragile. It exists in one person’s mind, disappears when they leave the company, and is easily mistaken for natural talent when it is actually the result of slowly accumulating insights from successes and mistakes. A small business that treats pricing experience as an individual gift rather than knowledge that can be built and shared loses out every time the decision-maker changes—and starts over from scratch, with the same tendency to anchor prices to costs that the junior manager had on day one.
It is worth distinguishing between two things that are often treated as synonymous: time in the role and pricing experience. The first is simply chronological. The second is what that time has actually taught you—and learning only happens when a mistake is recognized, identified, and remembered the next time a similar decision comes up.
How Experience Changes Pricing Decisions
Pricing literature treats experience as a way to broaden a decision-maker’s frame of reference: every decision, right or wrong, adds to the range of situations they have encountered and makes them more likely to recognize a recurring pattern. A manager who has made only three pricing decisions has a limited set of references to draw on. A manager who has made fifty such decisions in different contexts has a richer mental map—even if they cannot name every point on it.
This accumulated experience has a specific effect: it tends to shift pricing decisions away from cost alone. Those who are new to pricing, without a well-developed strategic perspective or a clear understanding of market behavior, tend to rely on the most readily available and easiest number to defend—cost. It is a safe haven: no one questions a margin applied to a well-calculated cost. Defending a price based on perceived value or competitive positioning requires a more sophisticated argument, and experience is what provides it.
Over time, the pattern reverses. Experienced managers have seen what happens when they ignore the competition—they lose sales by pricing too high in a commoditized market. They have also seen what happens when they ignore value—they leave money on the table with a truly differentiated product. Together, these two lessons push the next pricing decision beyond cost alone, even if the formula remains cost plus margin.
Why Past Mistakes Matter More Than Successes
Much of what we learn about pricing comes from decisions that went wrong, not those that went right. A correct price confirms an existing assumption; a wrong price forces you to revisit it. That is why experience does more to reduce cost anchoring among those who have already been through a price war, run a promotion at a loss, or lost a major customer to a competitor charging less.
This also explains why experience alone, without any kind of record, takes so long to build expertise. If a mistake is not identified as such—if the company only realizes that “the quarter was weak” but cannot pinpoint that a specific product was priced out of line with what the market was willing to pay—the lesson simply does not stick. The person may feel they learned something, but they cannot apply it to the next similar decision because there was never a clear criterion, only a vague sense of unease.
What Edson’s Research Revealed About Experience and Accuracy
It is worth considering a counterpoint based on data, not theory. A 2023 FIPECAFI master’s study conducted by Edson Clementino da Silva with 70 small business managers tested which personal characteristics led to pricing that was closer to the technically correct level. One of the characteristics tested was years of experience—the sample included 44.29% of respondents with more than 21 years in the industry.
The result may be uncomfortable for those who rely entirely on experience: no qualitative characteristic of the manager or the company, including experience, had a statistically significant effect on pricing accuracy—all tests had p-values above 0.05. According to the same study, greater accuracy came from using a calculation tool: respondents with a simulation spreadsheet arrived at an average price of R$266.22, with a standard deviation of R$3.93—the narrowest distribution of the three tested—compared with the technically correct price of R$263.29.
Reconciling the two findings reveals no contradiction; they complement each other. Experience gives you a better sense of when to question cost alone—that is judgment, not calculation. But knowing when to question it is not the same as calculating correctly. Without a tool to structure the calculation, intuition honed through years of mistakes will still get the number wrong—just with more confidence than a beginner would.
Turn historical data into criteria, not intuition
The practical benefit of taking this seriously is turning personal experience into written criteria that anyone making the decision later can apply consistently. A few questions can help with this process:
- When was the last time a cost-based price lost a sale to a competitor, and how much higher was the company’s price?
- When was the last time cost-based pricing left money on the table because the customer would have paid more?
- What signal, if spotted before the decision, could have warned you about this?
- Is that signal recorded anywhere, or does it exist only in the decision-maker's memory?
A concrete example shows how this changes the calculation. A distributor sets the price of an item that costs R$ 80. In its first year of operation, with no historical data, it applies the industry-standard markup of 30% over cost:
price = cost × (1 + markup) = R$ 80 × 1.30 = R$ 104.00
After losing two major accounts to a competitor charging R$ 98 for the same item, the company records the event—not as an impression, but as data: "product X, 30% markup, lost to a price of R$ 98." At the next review, with this criterion documented, the markup for that specific item drops to 20%, bringing it in line with what the market actually pays:
price = cost × (1 + markup) = R$ 80 × 1.20 = R$ 96.00
The difference between R$ 104.00 and R$ 96.00 did not come from intuition that happened to mature over time. It came from a specific mistake that was documented and used as a criterion for the next decision. This is what separates experience that builds a method from experience that merely adds years on the job.
The Risk of Treating Tenure as a Guarantee
The opposite mistake also happens, and it is more costly than it seems: assuming that someone who has been setting prices longer is inherently better at it, without requiring that experience to have produced any clear criteria. Who sets prices in a small business is almost always the owner, and it is common for their years in the role to be treated as reason enough not to question the figure—“they know what they’re doing; they’ve been setting prices this way for years.” Research shows that experience alone is not enough: time without tools does not guarantee accuracy, and tools without a record of past errors do not guarantee an accurate reading of the market either.
What works is combining both: the judgment that only experience can build—knowing when to question a cost—with a method that turns that doubt into a number, whether through markup or a margin calculated on the selling price, as long as the formula is correctly identified and applied using the right data. A company that records its pricing mistakes and can recalculate them does not depend on one specific person to make sound decisions. Over time, it builds something rarer than intuition: a method that outlasts the person who created it.
