How Entrepreneurs Set The Right Price Without Losing Out

How Entrepreneurs Set the Right Price Without Losing Out

As a business owner, I come across many founders and entrepreneurs who struggle to understand their market pricing. If the service or product is good and fits the market, the price tag is right, depending on how entrepreneurs price it without leaving money on the table. You underprice because it “feels fair.” Or you copy a competition and wonder why development stalls. Pricing is not just a number; it’s the clearest indicator of the value you create, the business you want to build, and your market position.

Let’s take an example of cost-plus pricing. This method is a direct approach but rarely reflects what the consumer really gets. Value-based pricing starts with understanding the client problem. What does the solution cost them today, in time, money, or lost opportunities? What would it be worth to solve this problem?

Think of an entrepreneur who created a product that reduced their invoice chasing from 10 hours a week to 2. If a small business values that time at £40 per hour, then the monthly worth is around £1,280. Anything from £99 to £199 is a steal, not a gamble. One business I worked with was charging me £350 for a service, which I thought was expensive. I did use the service of another provider that provided precisely the same service, and the payment was £150. This event was an eye-opener. You could do a price match, just like Aldi does with other shops, especially if the service and value are similar.

You need to know what your competitors charge, especially if you’re in the same business and market. Customers will always have options, especially if they can obtain the same service and value.

Let us take the examples below:

Direct competitors: what do they price for, and what features do they have?

Willingness to Pay: Interview 10-15 Ideal Customers

What is this too pricey for? Is it too cheap to be true? “Deal? Expensive yet passable?

Most early-stage founders realise they are undervaluing themselves. The market doesn’t reward “niceness.” It rewards lucid thinking.

Select a model based on your stage of business.

Penetration is when you need volume and network effects, and you need them quickly.

Premium or value-based works when you solve a high-stakes problem for a specific sector.

Hybrid is becoming more typical for internet and AI solutions as it scales with the value delivered.

Pricing is not a one-time choice. Review every 90 days. Look for who says yes quickly and who only objects on price. Focus on the outcomes that diverse teams or solo founders care about, rather than using jargon.

You don’t need perfect data on day one. You need a smart starting point based on actual consumer value, a clear picture of the competitive landscape, and the courage to modify as you learn. Nail it, and price is no longer a source of tension. It is one of your strongest growths.

As a startup, you want to avoid making judgements about pricing. Contact Luxi Consulting for a pricing strategy that works for your firm. Send us an email to get you started. Read more…