Glossary · Sales
What is Pricing Strategy?
Definition
A pricing strategy is the method you use to set prices so they cover your costs, fit what customers will pay, and support your desired profit.
Why it matters
Most new founders underprice. Common approaches include cost-plus pricing, competitor-based pricing, and value-based pricing, where you charge according to the result delivered.
A logo designer spends 12 hours per project. At $25 an hour that is $300, but if the logo helps a restaurant stand out and the owner would pay $900, value-based pricing captures more. Sixteen projects a year at $300 is $4,800; at $900 it is $14,400 for the same effort.
Test prices gradually, offer good-better-best packages, and watch how demand changes. Remember to include your time, taxes, and overhead when setting a floor.
Common mistakes
- !Setting prices by copying competitors without knowing their costs.
- !Giving frequent discounts that train customers to wait for a sale.
Frequently asked questions
What is Pricing Strategy?
A pricing strategy is the method you use to set prices so they cover your costs, fit what customers will pay, and support your desired profit.
What mistakes do beginners make with Pricing Strategy?
Setting prices by copying competitors without knowing their costs. Giving frequent discounts that train customers to wait for a sale.
Related terms
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