Amazon vs. Diapers.com: “Match Pricing…No Matter What the Cost”
AWS: Early-Pay Discount at Cloud Scale
Chipotle’s Burrito Math: Guac Costs + Crew Costs
Costco’s $1.50 Hot-Dog Combo: The Price Image Anchor
DoorDash: Feeling Fees to Sustainable Savings
Goodles + Native: “Premium-First” GBB (and the Elasticity Everyone Underestimates)
HCA Healthcare: Cost Pressure + Contract Deadlines = Triggers to Reprice (Not “Vibes”)
Netflix: Price Hikes + Ad Tier = Willingness-to-Pay Segmentation
The New York Times: Standalone → Bundle = Clean, Self-Selected Segments
Peloton: When Premium Hardware Meets Post-Pandemic Gravity
Planet Fitness: Keep the Base, Grow the Black Card – Recurring Revenue in the Wild
Salesforce: Advertising the Plan B to Re-anchor Value
San Francisco Giants: Price the Pitcher – Dynamic Seats in the Ballpark
Spotify: Freemium + Multi-Premium Ladders to Test Elasticity
Target: Everyday Cuts (Not Coupons) – Re-earning the Value Image
Amazon
CASE FILE
Amazon vs. Diapers.com: “Match Pricing…No Matter What the Cost”
“These guys are our #1 short term competitor … [W]e need to match pricing on these guys no matter what the cost.”
– Amazon executive Doug Herrington on Diapers.com
Setup. In 2009–2010, Quidsi’s Diapers.com gained traction with new parents, an audience Amazon viewed as strategically valuable (win diapers, then win the household basket). The category’s economics were already brutal: bulky, low-margin goods where shipping can quietly eat your lunch.
Move. Amazon chose the blunt instrument: go to war on price, explicitly framing Diapers.com as the competitor to neutralize and describing a plan built around market-leading pricing on diapers, plus a Prime-like “Amazon Mom” offer aimed at new parents. Internal documents showed Amazon was willing to lose $200 million in one month on diapers alone.
Outcome. Quidsi ultimately agreed to sell: Amazon disclosed it would acquire Quidsi for ~$500M cash and assume ~$45M of debt/obligations. Years later, Amazon said it still couldn’t make the unit profitable and moved to shut it down.
Lesson.
Price wars aren’t “pricing decisions.” If a rival can fund losses you can’t, matching everywhere is volunteering for the Bertrand trap. Instead: 1. Fence any response (segment/channel/time), 2. Shift the basis of competition (service, bundles, guarantees, switching friction), and 3. Write down your walk-away margin before the next “match it” panic hits.
AWS
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AWS: Early-Pay Discount at Cloud Scale
“A flexible pricing model that offer[s] low prices…in exchange for a commitment to a consistent amount of usage (measured in $/hour) for a 1 or 3 year term.”
— AWS Compute and EC2 Instance Savings Plans
Setup. Cloud buyers hate two things: Volatile bills and long-term lock-in. Cloud sellers hate one thing: unpredictable demand. AWS’s core challenge was how to let customers keep operational flexibility while still nudging them toward serious commitment (without cutting the list price for everyone).
Move. AWS turned “payment terms” into a product menu. Instead of a single compute price, customers choose how much commitment they’ll stake:
On-Demand: Pay as you go.
Savings Plans: Commit to a steady spend rate for 1 or 3 years; AWS charges the discounted rate up to that commitment.
Reserved Instances: Commit to a specific configuration for 1 or 3 years, with explicit payment terms (where higher upfront payment generally buys a bigger discount).
This is deposits/prepay logic in B2B clothing: Pay earlier/commit longer → earn a better deal.
Outcome. AWS documents savings of up to 72% over On-Demand, providing a powerful argument for swapping flexibility for savings.
Lessons.
When buyers fight the headline number, trade on terms instead. Commitment length + upfront payment are pricing levers that 1. Screen for seriousness, 2. Improve cash-flow predictability, and 3. Reduce churn-y usage without discounting the brand by dropping list price.
CASE FILE
Chipotle’s Burrito Math: Guac Costs + Crew Costs
“For the first time in over a year, we have taken a modest price increase of ~2% nationally to offset inflation”
– Laurie Schalow, Chief Corporate Affairs Officer, December 2024 Statement
Setup. Tight labor markets and ingredient inflation (beef, dairy, and, of course, avocados) kept pressure on Chipotle’s margins. After implementing localized hikes in California tied to the $20 fast-food minimum wage, Chipotle faced the question of how to nudge prices nationally without dinging traffic or value perception.
Move. In December 2024, Chipotle rolled out a 2% nationwide increase and explicitly framed it as an inflation offset. Those earlier 6-7% regional moves in California were tied to wage law changes – and communicated as targeted, input-linked adjustments.
Outcome. The company signaled stable (even increased) demand and manageable elasticity: low-single-digit cost inflation on sales and labor, continued unit expansion, and competitive positions (a chicken burrito still costs around $10 in Cali). The message to consumers? Small, transparent changes that protect service and portions.
Lessons.
Tie increases to concrete inputs and wages. Use plain language that links small, absolute changes to specific cost drivers (wage laws, those pesky avocados). Coupled with continued service and quality product, it reads as stewardship, not opportunism.
Sequence and localize before you nationalize. Pilot targeted, regional changes when a law or input shock hits one market (i.e., California), watch subsequent behavior, then apply a lighter national nudge.
Mind the “total burden.” Use comms that emphasize “modest” increases to “offset inflation.” It can also be the difference in framing between dollars and percentages (e.g., “+$0.20-$0.40 on some items) while reaffirming value and portions to keep perceived burden low.
Chipotle
Costco
CASE FILE
Costco’s $1.50 Hot-Dog Combo: The Price Image Anchor
“I came to (Jim Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty. We are losing our rear ends.’ And he said, ‘If you raise the effing hot dog, I will kill you. Figure it out.’”
Setup. A low, famous price can define brand value perceptions (and sell 123 million hotdogs and $4.5 billion in revenue in 2024).
Move. Costco has made a conscious effort to keep its signature hot dog + soda combo to $1.50 for over 40 years – as a pricing strategy with symbolic significance. When your brand is providing the best value for your customers (predicated on a yearly membership fee), having a highly visible anchor/halo for the warehouse value promise is, well, invaluable.
Outcome. For the price of a cheap hotdog, Costco maintains a cultural touchstone that reinforces “we fight for value,” arguably lowering price sensitivity across the basket. It’s a price that maintains an iconic item, engenders brand loyalty, aligns with company values, and forces discipline in pricing across the company to ensure you make enough money to get a fair return.
Lessons.
Maintain a handful of iconic, never-raise items; make them visible and consistent to reinforce the company-wide value frame. The $1.50 hot-dog combo is Costco’s public anchor for “we fight for value,” priming every other price to feel fair. Plus, having repeatable anchors (see also, rotisserie chicken, gas) creates trust memory that suppresses price checking elsewhere.
Surface “effective cost” comparisons and message savings per trip/month to make the bundle’s economic value obvious. Foregrounding comparisons like “cost per meal,” “cost per ounce,” “cost per mile (gas),” “savings per trip vs. grocery” makes the total bundle’s EV obvious.
CASE FILE
DoorDash: Feeling Fees to Sustainable Savings
“If the… savings are less than $96 USD, DoorDash will refund the difference.”
Setup. Delivery apps have a psychology problem: Consumers don’t just evaluate the total – they feel the fees. $9 in “service/delivery” stings more than a $9 higher menu price because it reads like nickel-and-diming. DoorDash is no exception.
Move. DoorDash’s DashPass reframed the purchase from “death by fees” to “predictable savings,” using three classic framing levers:
Temporal framing + anchoring: $9.99/month vs. $96/year, presented as “($8/month),” a cheaper-per-month anchor that makes annual feel like the smart default.
Savings framing: DashPass pages explicitly translate benefits into an easy mental model: “Save an average of $5 on eligible DashPass orders,” plus “$0 delivery fees and lower service fees.”
Reduced “fee pain”: By shifting costs into a subscription, the per-order checkout becomes psychologically cleaner, even when the economics are the same.
Outcome. DoorDash keeps growing while pushing subscription adoption. In Q3 2025, DoorDash reported 776 million total orders (+21% YoY) and $3.446B revenue (+27% YoY). And Doordash had already exceeded full-year expectations for U.S. DashPass paid member additions by the first nine months of 2025.
Lesson.
When buyers fixate on “fees,” don’t debate, reframe. Convert drip-y, fairness-sensitive line items into a clean, predictable reference point (subscription or all-in bundle). Then do the value math for them (“save $5/order,” “$8/month”). Your copy becomes the salesperson and your checkout stops being the villain.
DoorDash
Goodles and Native
CASE FILE
Goodles + Native: “Premium-First” GBB (and the Elasticity Everyone Underestimates)
“This feels like a huge unlock in terms of growing the category.”
– Goodles co-founder Jen Zeszut
Setup. In mature CPG categories, teams often map GBB as a linear climb: Start “good” (cheap), then “earn” premium later. But modern entrants keep testing (and proving) the opposite. They’re launching with a “best” option to avoid the price-war gravity of the middle. Think Native in deodorant (selling around $13 a stick while mainstream brands sell closer to $4-$5), which has bet on a real premium segment with lower price sensitivity.
Move. Instead of trying to win the same “good” buyer, premium-first brands change the axis (ingredients, identity, nutrition, design) and price like “best from day one. Native’s play was compelling enough that P&G bought the brand for $100M. And, Goodles did something similar in mac & cheese, selling a single box at nearly $3 vs. Kraft’s $1.24 at Walmart, positioning the product as “adult” and “better-for-you” and not apologizing for it.
Outcome. Premium entrants expand the category’s price brand and expose hidden elasticity. Kraft’s share fell to 39% from 45% in 2022 while Goodles has gained 6% since its 2022 debut.
Lessons.
Don’t roadmap GBB as a rite of passage. If you can credibly redefine value, launching at “best” can be the least elastic place to start, while incumbents fight over the most price-sensitive middle.
Map elasticity by segment, not by tradition. Your “best” might be the fastest path to avoiding commodity rules, and your later roadmap can fill “better,” not the other way around.
CASE FILE
HCA Healthcare: Cost Pressure + Contract Deadlines = Triggers to Reprice (Not “Vibes”)
“Hospitals face a perfect storm of financial pressures: persistent cost growth, inadequate reimbursement, and shifting care patterns…”
– American Hospital Association, The Cost of Caring
Setup. Hospitals don’t get to opt out of inflation. Labor alone is now about 56% of total hospital costs, and advertised RN salaries have grown 26.6% faster than inflation over the past four years. Meanwhile, reimbursement can lag: from 2022–2024, the AHA notes general inflation rose 14.1% while Medicare net inpatient payment rates increased only 5.1%. That gap becomes a pricing trigger: either costs come back down (rare), or you go get paid elsewhere (commercial).
Move. HCA Healthcare turned “when to push price” into hard triggers tied to (1) cost pressure and (2) contract clocks. In a 2024 dispute with UnitedHealthcare, the negotiation had a clear forcing function: a contract deadline that could have disrupted coverage across 38 hospitals in multiple markets. United’s public messaging claimed HCA’s requested increases were as high as 30% over two years in South Carolina or 16% in a single year in Texas. Whether or not you like the numbers, the mechanism is the point: pre-set renegotiation windows + walk dates create an explicit “move moment.”
Outcome. The sides ultimately reached a multiyear agreement, avoiding the coverage interruption. And HCA’s pricing/contract tailwinds show up operationally: same-facility revenue per equivalent admission rose 6.6% in Q3 2025 vs. Q3 2024.
Lessons.
Build a trigger stack for price moves: cost indicators (labor share, wage inflation) → reimbursement gaps (inflation vs. government updates) → contract deadlines. When those trip, you don’t “consider” raising prices – you execute the playbook.
HCA Healthcare
Hermes
CASE FILE
Hermes: Price as Proof – Cadenced Increases, Zero Discounts
“We keep our leather workshops at 300 people…We have great clients. They know what they want, and they know why they come to us.”
– Axel Dumas, Hermes CEO, Feb 2025 earnings call recap
Setup. In luxury, “fair” doesn’t mean cheap – it means consistent rules. The category has spent years trying to redefine what “luxury costs,” with price increases driving ~80% of sector growth from 2019-2023. But when hikes feel unmoored from craft, access, or experience, customers call it greed (and brands get dragged). The winners aren’t the brands that hike hardest; they’re the brands that pair steady price elevation with fairness guardrails customers can feel.
Move. Three players that have executed the playbook with discipline:
Coach has raised prices in 19 of the last 20 quarters (cadence as a policy, not a one-off event).
Ralph Lauren keeps pushing price/mix up while explicitly pulling back on promotions (the “fairness” guardrail: we’re not jacking price while training you to wait for discounts).
Hermes has historically executed modest, frequent increases (~7% globally in 2025). On top of those increases, the company tacked on an additional U.S. uplift to offset tariffs while keeping allocations strict and messaging minimal (in other words, no splashy consumer marketing around prices).
Outcome.
In the quarter ending December 28, Coach revenue rose 10% and Ralph Lauren rose 11% (constant currency), with gains attributed to pricing strength.
Hermes posted +9% sales at constant rates in Q2 2025, outpacing peers and sustaining elite margins.
Lessons.
Fairness isn’t “cheap.” It’s consistency. If you want to reprice what “premium” means annually, make the increase predictable and pair it with visible integrity moves (fewer promos, tighter distribution, better product).
Guardrails prevent resentment. The fastest way to lose trust is “higher list price + constant markdown theater.” Raise the bar and remove the coupon addiction.
McDonald’s
CASE FILE
McDonald’s Value Meals: Simple Bundle, Big Impact
“The single biggest driver of what shapes a consumer’s overall perception of McDonald’s value is the menu board… We’ve got to get that fixed.”
— McDonald’s CEO Chris Kempczinski
Setup. As inflation pushed “value perceptions” in the wrong direction, McDonald’s saw demand soften. When customers feel nickel-and-dimed, bundling becomes less about “discounting” and more about restoring a clean, predictable all-in price.
Move. McDonald’s leaned hard into “make it a meal” bundling and scaled national value bundles. They launched the $5 Meal Deal in 2024 before pushing value bundling even more explicitly in 2025: Eight combo meals priced ~15% less than buying items separately, with advertised price points like $5 (breakfast bundle) and $8 (Big Mac-style bundle).
Outcome. Bundling didn’t just “move units,” it improved order economics and reacquired customers. In the weeks after launch, about 25% of McDonald’s customers ordered the $5 bundle; 12% of bundle buyers were lapsed (no visit in 3 months), and ~5% were new. Even better: Orders that included the bundle showed ~12% higher check than orders without it.
Lesson.
Bundling is a perception tool and a basket tool. If customers are reacting to item-by-item sticker shock, simplify the “job” into one price (and make that price visible where decisions happen). Bundle the default path, then measure attach rate, check lift, and lapsed-customer reactivation before you touch list price.
Netflix
CASE FILE
Netflix: Price Hikes + Ad Tier = Willingness-to-Pay Segmentation
“As we continue to invest in programming and deliver more value for our members, we will occasionally ask our members to pay a little more so that we can reinvest to further improve Netflix.”
– Netflix Q4 2024 Shareholder Letter
Setup. After a year of huge subscriber gains in 2024 (with an additional 19 million new subscribers in Q4 alone), Netflix faced the classic question: “How much more can we charge without spiking churn?”
Move. At the start of 2025, Netflix raised prices across plans while expanding the lower-priced, ad-supported tier to catch price-sensitive demand. The move means not only increased revenues at each subscription tier, but a wider band of subscription price points captured both value-conscious and premium ends of consumers.
Outcome. Netflix continues to thread the needle, capturing continued sub growth alongside price increases. And, it signals a confidence in value prop and ability to command higher prices while driving additional revenue.
Lessons.
Price with confidence by segmenting WTP, not by chasing a single “right” price. Use stated WTP (surveys) to set hypotheses while turning to real-world WTP (downgrades, pause rates, rejoin rates) to update priors.
Pair premium increases with a value entry to manage elasticity and expand the demand curve. Treat price moves as experiments rather than events and see how elasticity hits different cohorts to understand downgrades vs. churn, etc.
Keep a clearly “premium” plan to set the anchor and emphasize qualitative gaps through tier names. A clearly more expensive plan anchors the mid-tier as “reasonable.” Use feature names (“Premium/Ultra”) to make the anchor feel significantly different, not just more of the same.
CASE FILE
The New York Times: Standalone → Bundle = Clean, Self-Selected Segments
“[Our] bundle…provides the most value to our users and represents the best opportunity to monetize our digital products.”
Setup. NYT sells multiple “jobs” (news, games, cooking, sports), and those audiences don’t share one willingness-to-pay. The publication has a longstanding need to attract the widest number of subscribers and create multiple reasons to engage every day.
Move. Enter segmentation by product version (standalone vs. bundle) plus a second fence: household sharing. In September 2025, NYT launched family subscriptions. This is segmentation without personalization: customers self-select into higher price points by choosing broader access or more seats.
Outcome. By Q2 2025, NYT >50% of customers had migrated into higher-value segments. In Q3 2025, NYT added ~460,000 digital-only net subscribers and surpassed 12.3 million total subscribers. Subscription revenue rose 9.1% YoY to $494.6M.
Lessons.
Segment with obvious fences you can explain in one sentence – standalone for breadth, bundle for depth, family for households.
Use a “starter” offer to maximize top-of-funnel, and a clearly higher-value bundle to monetize the habit-formers. It saves negotiating price one customer at a time.
New York Times
CASE FILE
Peloton: When Premium Hardware Meets Post-Pandemic Gravity
“We want more people to be able to afford our hardware. This is a strategic decision to play for scale and increase market share.”
– Peloton pricing update, 2022
Setup. Peloton built its brand on multi-thousand-dollar bikes plus $39/month subscription, aimed at affluent, time-poor, goal-driven professionals. During the pandemic, revenue surged, but by late 2023, growth had stalled and demand normalized.
Move. Peloton responded by changing its pricing on two fronts. First, it slashed hardware prices, repositioning the bike from luxury object to attainable home cardio. At the same time, they also raised the All-Access monthly membership cost, justifying it with heavier content investment and huge jumps in usage.
Outcome. Call it a lesson in unforgiving market forces. Revenue fell, margins compressed, and the brand that once signaled luxury bike started to read more “connected fitness platform with tiered access.” It’s still premium, but in a much more crowded lane.
Lessons.
Your price is part of your positioning sentence (and market forces always get a vote). Peloton’s hardware cuts and subscription hikes effectively rewrote its story from “exclusive hardware status symbol” to “scaled platform trading margin for member base.”
Choose a lane you can defend when subsidies, demand, and competitors all move at once. If your economics really depend on recurring value (like Peloton), make sure your hardware price, subscription price, and messaging all reinforce what your value proposition is.
Peloton
Planet Fitness
CASE FILE
Planet Fitness: Keep the Base, Grow the Black Card – Recurring Revenue in the Wild
“Based on our learnings, we decided to change the price of the Classic Card to $15. It drove the most significant increase to average unit volumes with the least impact to the rate of joins.”
— Interim CEO Craig Benson (Q1 2024 earnings call)
Setup. With a member base of value-focused, price sensitive individuals and seasonal spikes (New Year’s, back-to-school), Planet Fitness faced the question of whether they could change their $10 “Classic” pricing – a decades-long stalwart for the value gym.
Move. After significant testing, Planet Fitness opted to shift the Classic membership from $10 to $15 for new members, keep the PF Black Card tier (multi-club access + perks) as the premium bundle, run limited-time $1-down promos, and keep “price-for-life” for legacy members.
Outcome. The switch resulted in higher ARPU with minimal join friction, a clean willingness-to-pay ladder (Classic → Black Card) that monetizes perks without broad discounting.
Lessons.
Harness recurring-revenue levers with tiered memberships. For Planet Fitness, that means adding guest privileges, any-club access, and spa perks to move willing members up while preserving a sharp entry price for the rest. The upgrade path drives ARPU without cutting the base.
Consider your deposits and payment terms. For example, run time-boxed, low-friction terms (see the $1 down promos from Planet Fitness) to catch seasonal intent and reduce sign-up friction. It’s pricing relief via terms, not list-price cuts.
Keep an eye on the KPIs and cadence. Regularly review signals like joins, cancels/freezes, promo conversion, and legacy cohort size to throttle promos and tweak messaging (rather than changing list price).
Salesforce
CASE FILE
Salesforce: Advertising the Plan B to Re-anchor Value
“The End of Software.”
— Salesforce’s early positioning/tagline
Setup. In early enterprise CRM, the buyer’s Plan B was painfully concrete: buy licenses, install software in-house, stand up hardware, and staff IT to maintain it. Plus, there was a high total cost of ownership and poor ROI in traditional CRM deployments.
Move. Salesforce made the NBA the villain in its advertising. The company’s “No Software” logo was explicitly positioned against installed, on-prem software. Under the hood, this is EVE: define the reference state as in-house software ownership and sell the differential value as lower risk + lower deployment friction + avoided IT overhead.
Outcome. The model scaled fast: revenues grew from $5.4M (FY2001) → $22.4M (FY2002) and then to $51.0M (FY2003). By Oct. 31, 2003, Salesforce reported ~8,000 subscribing customers and 110,000+ paying subscribers across ~70 countries.
Lesson.
If you want value-based pricing, advertise the NBA first. Make the customer’s default option explicit (“buy + install + maintain”), quantify what that baseline really costs (time, risk, headcount), then price below the avoided baseline pain – with simple, repeatable proof.
CASE FILE
San Francisco Giants: Price the Pitcher – Dynamic Seats in the Ballpark
“A Monday Pirates game is not the same as a Dodger Sunday, so pricing them the same way doesn’t make a whole lot of sense.”
– Russ Stanley, Giants ticketing chief, on adopting dynamic pricing
Setup. The MLB has long known that willingness-to-pay swings with opponent, starting pitcher, day of the week, weather, and promos. Static pricing left money on the table to must-see games and seats unsold on for less popular matchups.
Move. The Giants became the first pro team to deploy dynamic pricing (pilot in 2009, moving park-wide in 2010) using Qcue software. They updated prices daily by section/seat while guarding season ticket holder value.
Outcome. Pilot: +25,000 tickets and +$500K. First full season: +~$7M revenue. Teams across the MLB adopted the approach.
Lessons.
Harness data loops for dynamic pricing. For the Giants, this means treating each game as a market. They feed data like sell-through pace, opponent/pitcher, day, weather, and secondary-market signals into a daily model to raise the price when pace outperforms forecast and relax when it lags.
Consider bundling and unbundling. As an example: keeping season tickets and mini-plans as commitment bundles (gaining predictable revenue for perks) while letting single-game seats float dynamically for last-minute yield.
San Francisco Giants
Spotify
CASE FILE
Spotify: Freemium + Multi-Premium Ladders to Test Elasticity
“We’ve always put subscribers on a pedestal. We’ve raised prices recently and seen very strong retention.”
– Alex Norström, Spotify Chief Business Officer, Q2 2025 Earnings Call
Setup. By 2023, Spotify had a classic streaming problem: rising content and operating costs, decent growth, but inconsistent profits. They already had the GBB model in place with tiers at Free (ad-supported), Premium Individual, and multi-account plans. The question was how far they could push price across that ladder without driving users to downgrade or churn.
Move. Spotify raised U.S. Premium prices twice between 2023 and 2024. Crucially, the GBB ladder stayed intact. Those fences made trading down painful (loss of sharing, verification hassles), while trading up felt like a deal on a per-person basis.
Outcome. Even with repeated hikes, Premium subscriptions grew ~11% in 2024 and Spotify posted its first full year of profit. That was with little disruption to plan mix; most users stayed in their chosen tier even as plan prices climbed. In elasticity terms, the “better” and “best” tiers were less price-sensitive than Spotify feared.
Lessons.
Use GBB to measure elasticity, not guess it. Spotify moved prices by 8%-22% per tier and watched where churn and downgrades actually showed up, rather than treating all subscribers as one elasticity number.
Make downgrades hurt on outcomes.
Free isn’t just fewer features, it’s worse quality. Leaving Premium should mean a worse experience, not just one less bell/whistle.
Let “best” carry the heaviest lift.
Household plans with address/eligibility fences captured high-WTP users and absorbed the steepest price jumps, protecting margin and ARPU.
Target
CASE FILE
Target: Everyday Cuts (Not Coupons) – Re-earning the Value Image
"We know consumers are feeling pressured to make the most of their budget, and Target is here to help them save more."
– Rick Gomez, executive vice president and chief food, essentials and beauty officer, (May 2024 statement)
Setup. In 2024, softening traffic due to continued inflation made shoppers start price-checking essentials, frequently trading down to less expensive brands or storefronts. Target needed traffic recovery without cheapening the brand.
Move. To counter the growing barrier to the weekly “fill-the-cart” job, Target announced everyday price reductions on ~5,000 high-frequency, price-sensitive SKUs (groceries, baby items, paper goods). They started the structural roll-out over the summer and then extended the strategy into the holidays (ultimately lowering prices on 10,000+ items in 2024).
Outcome. Target reset the value image where it matters (in essentials) and narrowed the perceived gap with Walmart while protecting margin via mix (owned brands vs. private label) – a longer-term fix than promo spikes.
Lessons.
Diagnose price-sensitive segments. Start with basket anchors. If these items feel high, the whole store feels high. That’s where they lowered first to unlock the weekly cart.
If your “value image” is broken, go for structural cuts over short-term promos. Recognize that permanent shelf price moves rebuilt trust where promos and coupons don’t. Target framed its lowered prices as everyday price drops, not deals to rebuild trust.
Guard margin by avoiding a race-to-the-bottom. For Target, this meant using their private-label depth (dealworthy, up&up, Good & Gather) and category selection to offset the cuts instead of slashing across the board.
United and ULCC Airlines
CASE FILE
Basic Economy = Lower Price, Clear Trade-Offs
"As a competitive tool, it's done exactly what we wanted it to do."
– United Chief Commercial Officer Andrew Nocella on basic economy
Setup. Legacy airlines continue to battle ultra-low-cost carrier (ULCC) price pressure. They needed to attract highly price-sensitive segments (i.e., “just get me there” flyers) without cannibalizing higher-fare cabins.
Move. Several airlines rolled out their variations of Basic Economy seating: a lower entry price with explicit trade-offs (seat selection, change flexibility, boarding priority, variations by airline, etc.).
Outcome. Big airlines have captured the “just get me there” job-to-be-done while preserving upsell to higher fare products (Economy/Main Cabin, Economy Plus, etc.). By having customers self-segment at checkout, they defend yield and reduce “race-to-the-bottom” pressure.
Lessons.
Understand your loss leaders and entry tiers. For the airlines, creating a clearly bounded entry tier with restrictions kept the “discount” architectural, not just an across-the-board price cut.
Focus on the “job-to-be-done” approach. For the airlines, that means designing Basic Economy for the traveler whose job is to arrive cheaply on fixed plans. Then, they leave out flexibility or extras the customer won’t pay for, leaving those as paid upgrades.
Guard margin and avoid a race-to-the-bottom. For the airlines, that means keeping full-feature economy as the reference point and making trade-offs crystal clear. The entry tier was designed to pull shares from ULCCs without resetting headline fares.
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