<p>The study examines the relationships between local pricing system of forest products and its effects on equitable benefit sharing and livelihood improvement of user households who are living in and around the forests. The community forest user groups of lowland in Nepal have practiced low pricing strategy for high value forest products considering the access of socio-economically poor households. However, the study suggests that even though the low pricing strategy was designed considering poor households, rich households greatly benefited from the forest benefits. The study further enlightens that the low price for high value forest products particularly timber is counterproductive for equitable benefit sharing among the user households in the areas of heterogeneous socio-economic conditions. In addition, the strategy is defective for collecting adequate community fund and carrying out enough livelihood improvement activities at the local level.</p>