Pricing Fundamentals

Run the upgrade.

1. 01

   Calculate your cost floor

   Add up the variable cost to deliver one unit of your product or service plus a reasonable allocation of fixed costs — this is the minimum price that avoids losing money.

   Cost floor = variable cost per unit + (fixed costs / expected unit volume)

2. 02

   Research comparable pricing

   Find at least 3-5 competitors or alternatives your target customer would consider, and note their prices and what's included.

3. 03

   Estimate the value delivered

   Quantify, even roughly, what the customer gains from your offer — time saved, money earned or saved, problem avoided — since price should reflect a fraction of that value, not just your costs.

   Value-based price ceiling ≈ estimated customer value x reasonable capture percentage (e.g., 10-30%)

4. 04

   Choose a pricing model that fits your business

   Decide between flat-rate, tiered, hourly, subscription, or usage-based pricing based on how your customers prefer to buy and how your costs scale.

5. 05

   Set your initial price within the range

   Choose a launch price between your cost floor and your value-based ceiling, positioned relative to competitors based on your differentiation.

   Initial price = between cost floor and value-based ceiling, adjusted for competitive position

6. 06

   Plan how you'll test and adjust

   Decide on a review point (e.g., after 10 sales or 90 days) where you'll evaluate conversion rate and margin to decide whether to raise, lower, or restructure pricing.