- The 3 most common pricing mistakes new founders make
- 4 proven pricing strategies and when to use each one
- How to calculate the minimum price you can charge
- How to raise your prices without losing customers
The pricing mistake that kills most new businesses
Pricing is one of the most powerful levers in your business. Set it too low and you work yourself into the ground for nothing. Set it too high and nobody buys. Most new founders default to charging too little, then struggle to raise prices later.
Your price is not a reflection of your confidence level. It's a business decision based on value, costs, and market positioning. Charge what the market will bear, not what you feel comfortable asking for.
Step 1: Calculate your costs first
Calculate your direct costs (materials, delivery), time costs (hours to deliver × your hourly rate), and overhead costs (tools, insurance, marketing divided by customers served). Add these together to get your cost floor — the minimum you can charge without losing money.
4 pricing strategies
Calculate total cost and add a markup. Simple but ignores what customers are willing to pay. Formula: Selling price = Total cost × (1 + markup %)
Price based on the value you deliver, not your costs. The most powerful strategy. Ask customers: "What would it be worth to you if this problem was completely solved?" Their answer is a far better guide than your cost sheet.
If your service saves a client €5,000/month, charging €1,000/month is easy to justify and leaves them with €4,000 in value.
Research what competitors charge and position relative to them. Don't use this as your only input — if competitors are undercharging, you'll inherit their problem.
Offer three tiers — basic, standard, premium. Customers self-select and the middle option feels like the sensible choice. The premium tier makes the middle feel like great value.
How to test your price
Offer your product to 10 people at your intended price. A 20–30% conversion from warm leads is reasonable. If everyone says yes immediately, you're probably priced too low. If everyone pushes back, either your positioning needs work or you need to revisit the number.
How to raise your prices
- Announce it in advance with a deadline to lock in current rates
- Grandfather existing customers for a period, then transition them
- Raise prices with new customers first to test the new rate
The bottom line
The right price covers your costs, reflects the value you deliver, and customers with a real need will pay. Start higher than you feel comfortable with — you can always negotiate down, but you can never negotiate up.
Charge what the outcome is worth, not what your imposter syndrome tells you to.