Three Things Every Price Must Respect
- Your costs. The price must be above what one item costs you, with enough left to pay your monthly costs.
- Your customers. What they are willing and able to pay for the value they get.
- Your competitors. What else customers could buy, and at what price.
5 Common Pricing Approaches
| Approach | How it works | Good when |
|---|---|---|
| Cost-based | Cost plus a fixed profit | Costs are clear and steady |
| Competitive | Close to what others charge | Many similar options exist |
| Premium | Higher than others, for better quality or service | You offer clearly more value |
| Penetration | Low at first to win customers, then higher | You need to build a customer base fast — and can afford lower profit at the start |
| Value-based | Based on the value or result the customer gets | Your product saves or earns customers money |
How to Set Your Price in 4 Steps
1. Know your cost per item
Add up materials, packaging, and anything else that goes into one item.
2. Check competitors' prices
Visit, call, or look online. Note what customers get for each price.
3. Choose your approach
Pick the one that fits your goal and your unique value.
4. Test it against your numbers
Use the calculator below, then check your break-even point. If you need to sell an impossible number each day, adjust.
Calculate Your Price
Free Price Calculator
Find a selling price from your cost and the profit you want. Everything is calculated on this page — nothing is sent or saved.
Selling price = cost ÷ (1 − margin ÷ 100).
Example (Illustrative)
Common Mistakes
- Pricing below cost to win customers, with no plan to raise prices.
- Copying competitors' prices without knowing your own costs.
- Forgetting monthly costs. Profit per item must pay for rent and salaries too.
- Never reviewing prices when costs go up.
Where It Fits in Your Business Plan
Pricing belongs in the Marketing Strategy section. Your prices also drive your sales estimate in the financial projections. In Founderplat, you choose a pricing model and write one line on why it works.
Frequently Asked Questions
How do I price my product or service?
Start with your cost per item, check what competitors charge, choose a pricing approach that fits your goals, and test the price against your break-even point.
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A 1.00 item sold for 2.50 has a 60% margin and a 150% markup.
What is penetration pricing?
Starting with a low price to win customers quickly, then raising it later as your business grows.
How often should I review my prices?
Whenever your costs change, and at least once or twice a year.
Build your plan with Founderplat
Founderplat walks you through all eight sections, one small step at a time, with tips and examples for every part.
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