What the Doritos pricing debacle reveals about value, alternatives, and pricing in B2B markets.

Recently, a bag of Doritos approached $7.

Consumers pushed back. Retailers pushed back. Private-label alternatives gained traction. Volume declined. PepsiCo ultimately acknowledged that it had pushed pricing too far, contributing to billions of dollars in lost market value and forcing the company to rethink its approach.

At first glance, this sounds like a consumer products story.  It isn’t. It’s a story about a mistake B2B companies make every day when pricing new technologies, innovative products, and powerful brands. And it comes down to three simple words: Compared to what?

1. Companies See a Breakthrough:  Customers See a Decision

Organizations become trapped inside their own expertise. The knowledge, technical capability, and experience that make companies successful can also blind them to how customers actually evaluate alternatives.

When companies develop a breakthrough product, they naturally focus on the value they have created: engineering achievements, performance improvements, new capabilities, and investments required to develop it. 

Customers see something different. They see a decision. And every decision is made relative to alternatives. That’s why one of the most important questions in pricing is not, “How much value have we created?” It is, “Compared to what?”

2. Customers Often Define Competitors Differently Than Companies Do

One of the most powerful lessons that emerges from competitive analysis is that customers often define the competitive landscape differently than companies do. In our Ability to Win work, one of the recurring “cold showers” occurs when teams are asked to identify the competitors that customers actually use as their reference set.

Companies naturally gravitate toward familiar competitors, the usual suspects, or organizations they know well. Customers are often evaluating a much broader set of alternatives.  Companies compare themselves to competitors they know. Customers compare them to alternatives they would actually consider. Those are not always the same thing. And when organizations discover that gap, they often uncover opportunities—or threats—that were hiding in plain sight.

Doritos provides a perfect example.  PepsiCo may have viewed its competition as other premium snack brands. Customers didn’t. Customers viewed Doritos against private-label tortilla chips, pretzels, popcorn, crackers, and countless other ways to satisfy the same need.  As the price climbed, customers didn’t suddenly stop liking Doritos. They simply began asking: compared to what? And the answer became increasingly unfavorable.

3. You Must Understand the Reference Set Customers Are Actually Using – Not the One You Hope They Are Using

The same dynamic appears in industrial, healthcare, technology, and business markets all the time.  Imagine an AI-enabled drilling technology that reduces downtime by 20%. How should it be priced?

Many companies would immediately compare it to competing drilling technologies. Customers might not. They might compare it to a service provider, a different operating process, additional labor, a competing technology category, or delaying the investment entirely.

Similarly, a medical device company may believe its innovation competes against another device. Hospitals may compare it against a procedure, a pharmaceutical intervention, a staffing solution, or a completely different approach to solving the problem.

The lesson is simple: before pricing an innovation, you must understand the reference set customers are actually using.  Not the one you hope they are using.

4. The Exact Place Where Many Organizations Get Blindsided

Pricing discussions often begin with value. That’s appropriate. But value only exists in context.  A product can create tremendous value and still be overpriced. A product can deliver meaningful innovation and still struggle commercially. Not because the innovation lacks merit, but because customers evaluate value relative to alternatives.

This is where many organizations get blindsided. They understand their own strengths. They understand their own investments. They understand their own differentiation. What they fail to understand is the broader decision environment customers are navigating. Again: compared to what?

5. Alternatives Define Pricing Boundaries Whether Companies See Them or Not

The companies that price most effectively force themselves to see the market through the eyes of customers.  They ask what alternatives customers are considering, which outcomes matter most, how customers define value, what trade-offs they are making, and when a premium becomes unreasonable. The answers are often surprising.

Sometimes the biggest threat is not the competitor everyone talks about. Sometimes it is a simpler solution, a lower-cost alternative, or an entirely different category customers view as “good enough.”  Those alternatives define pricing boundaries whether companies acknowledge them or not.

6. The Takeaway:  How To NOT Create the Next $7 Bag of Doritos In Your B2B Business

The Doritos story isn’t really about chips.  It’s about perspective—specifically, the difference between how a company sees its own value and how the market evaluates its alternatives.

A strong brand, significant market share, and years of success created a blind spot. The company became increasingly confident in the value it was delivering while losing sight of how customers were evaluating alternatives.

B2B companies face the same risk every day, particularly when launching innovations, pricing technical products, or feeling certain they have created something extraordinary. Because no matter how innovative the product, no matter how strong the brand is, customers eventually ask the same question:  Compared to what?

The companies that answer that question honestly are far more likely to find the right price. And far less likely to create the next $7 bag of Doritos.