One of the biggest challenges for new entrepreneurs is figuring out how much to charge. Price too high, and you risk scaring away potential customers. Price too low, and you may struggle to make a profit—or worse, be seen as low value.
Getting your pricing right is part strategy, part psychology, and part math. Let’s explore how to set prices that are profitable, competitive, and fair—without second-guessing yourself.
Why Pricing Is So Important
Pricing isn’t just a number—it affects:
- Your brand perception
- Customer expectations
- Profitability
- Market positioning
- Business sustainability
The right price builds trust and supports your long-term growth. The wrong one can cost you sales and credibility.
Step 1: Know Your Costs
Before anything else, calculate how much it costs to deliver your product or service, including:
- Direct costs: Materials, tools, production, packaging
- Operational costs: Software, marketing, payment fees, rent
- Your time: Even if you’re the only one working, your time has value
Then ask: What is the minimum I need to charge just to break even?
This is your floor price—you should never go below it.
Step 2: Research the Market
Study your competitors:
- What are others in your niche charging?
- What pricing structures are they using? (Hourly, per product, subscription?)
- Where do you want to position yourself—budget, mid-range, or premium?
Pro tip: Don’t race to the bottom. Competing on price alone is a losing game unless you’re operating at massive scale.
Step 3: Understand Your Value
Price is often a reflection of perceived value, not just production cost. Ask:
- What transformation or outcome do you deliver?
- How much time or money do you save your customer?
- Is your product or service unique, faster, easier, or more personalized?
People are willing to pay more for results and experience. Focus your messaging on benefits—not just features.
Step 4: Choose a Pricing Strategy
Here are some proven strategies you can apply:
1. Cost-Plus Pricing
Add a fixed percentage (e.g., 30%) on top of your costs.
Simple, but doesn’t consider value or market.
2. Value-Based Pricing
Price based on the results or benefits your offer delivers.
Example: If you help someone earn $1,000/month, your $200 service is a great deal.
3. Tiered Pricing
Offer 2–3 packages or plans with different features.
Gives customers options and increases perceived value.
4. Penetration Pricing
Start low to gain market entry, then increase as you grow.
Useful for new businesses or when entering a competitive space.
5. Premium Pricing
Set a high price to reflect exclusivity or luxury.
Works well with strong branding and niche targeting.
Step 5: Consider Psychological Pricing
Yes, numbers influence buying behavior. Try:
- Charm pricing: $29.99 feels cheaper than $30
- Anchoring: Show a high original price, then offer a discount
- Bundling: Combine products/services to increase average order value
These small tweaks can increase conversions without changing your product.
Step 6: Test and Adjust
Pricing is not a “set it and forget it” decision. Test by:
- Asking for feedback
- Monitoring sales performance
- Offering early bird or beta pricing
- A/B testing pricing pages
If people aren’t buying, your price may be too high. But if everyone’s buying without hesitation, it might be too low.
Step 7: Be Confident in Your Price
One of the biggest pricing mistakes? Lack of confidence. If you hesitate, undercharge, or apologize for your price:
- Customers will sense doubt
- You’ll attract the wrong audience
- You may burn out quickly
Instead:
- Own the value you provide
- Communicate the outcome, not just the process
- Practice saying your price out loud until it feels natural
Bonus: Pricing Models for Different Business Types
| Business Type | Suggested Pricing Model |
|---|---|
| Freelancers | Hourly rate or project-based |
| Product-based eCommerce | Cost-plus or value-based |
| Coaches/Consultants | Packages or retainers |
| Digital Products | Tiered pricing or bundles |
| Subscriptions/Memberships | Monthly recurring fees |
Final Thoughts: Pricing Is Part Strategy, Part Confidence
There’s no perfect formula—but there is a smart approach. Base your pricing on:
- Real numbers
- Market expectations
- The transformation you deliver
Then test, learn, and adapt.
Remember: You’re not just selling a product—you’re selling results, time, and value. Charge accordingly.