Pricing is often one of the most daunting aspects of running a startup. While it may not sound glamorous, it’s one of the essential pieces of the puzzle for business survival. With a significant percentage of startups failing within the first few years, pricing—and understanding competitive pricing insights—can be the difference between success and shutting down shop.
If you’re unsure about how to price your offering, here are five steps to guide you:
1. Leverage Competitive Pricing Insights & Challenge Doubts
It’s easy to second-guess your pricing. You might wonder if customers will laugh at your rates or if you’re asking for too much. The truth is, confidence matters more than perfection. By studying competitive pricing insights, you can gain clarity on what’s reasonable for your market. Do your homework and look at what others in your industry are charging. If your price is reasonable for the value you’re providing, chances are, customers won’t blink an eye.
2. Know Your Worth
You might feel uncomfortable asking for what you think your product or service is worth, but remember this: If your offering solves a real problem, it’s worth something. Reach out to past customers and ask how they felt about the value they received. Their testimonials can not only give you confidence but also help refine your offering.
3. Conduct Market Research
Take time to understand the competitive landscape. What are similar businesses charging? While you don’t need to match anyone exactly, knowing the general price range will help you position yourself. Incorporating competitive pricing insights ensures you stay aligned with industry expectations while maintaining your brand’s value proposition. Aim for a price that feels right for your brand and market, rather than just aiming for the cheapest or most expensive option.
4. Focus on the Numbers
It’s not just about what you want to earn—it’s about what it costs to run your business. From production costs and overheads like rent and utilities to marketing, insurance, and even the software you use, make sure you’re covering all the bases. Once you have a clear picture of your expenses, decide what profit margin will keep your business sustainable.
5. Get an Outside Perspective
Sometimes, you’re too close to your own business to make a clear judgment. That’s why it’s a great idea to get an outside perspective on your pricing strategy. An external advisor, mentor, or consultant can help you navigate the emotional biases that often come with making decisions about your own product. They can challenge your assumptions, provide constructive feedback, and bring an objective perspective that helps you see pricing through a clearer lens and apply competitive pricing insights to your specific context.
This objective input can also ensure that you’re not pricing based on emotion (fear of rejection, desire to charge less to gain more customers) but on facts and strategy. The right person can ask the tough questions that help you better understand your business, the value you provide, and how to appropriately position yourself in the market for long-term success.
Are you pricing your product for the value it truly delivers, or are you letting fear or assumptions dictate your rates?