How to Price Your Product Without Guessing

Pricing is one of the most important decisions for a new business, and many founders simply copy a competitor. A better approach combines costs, value and testing.

Know your costs

Add up what it costs to deliver the product: materials, hosting, support, fees and your own time. Your price must cover this and leave a margin.

Think about value

What is the problem worth to the customer? If your tool saves a business ten hours a month, a price of a small fraction of that is easy to justify.

Look at alternatives

Customers compare you to other options, including doing nothing or using a spreadsheet. Check what similar products cost and explain what makes yours different.

Common pricing models

• One-time price.
• Subscription, monthly or yearly.
• Tiered plans, such as Basic, Pro and Team.
• Usage-based, where customers pay for what they use.

Test and adjust

Ask potential customers what they would expect to pay, try two prices with different groups, and watch the reaction. If everyone says yes immediately, you are probably too cheap.

Avoid common mistakes

Do not compete only on being the cheapest, hide fees, or offer too many confusing plans. Make the price page clear.

Revisit it

Review pricing every few months as your product and customers change. Raising prices for new customers is normal when you add value.