Getting Pricing Right
Pricing is one of the most powerful levers in business, yet it’s also one of the hardest to get right. Many business owners feel uneasy when it comes to setting or increasing prices. The conversation feels personal, and objections from clients can feel like a judgment on your worth.
In reality, pricing is simply part of the value exchange between you and your customers. It signals your positioning, communicates value to clients, and underpins the sustainability of your business.
Pricing Beyond the Invoice
Price tells a story about your business. It shapes how clients perceive you, the value they expect, and whether your model is sustainable.
Service businesses feel this most acutely because the work is intangible. Unlike buying a product off a shelf, a client can’t compare your service side-by-side with others. That makes clear communication of value essential.
Early-stage founders often anchor themselves too low, choosing a number they think customers will accept. Over time, as experience and impact grow, pricing should evolve to reflect that growth.
The Three Pillars of Pricing
When working with clients, we often come back to three pillars: margin, customer perception, and market position.
1. Margin
Your pricing must cover costs and include your own profit. This means factoring in software subscriptions, staff wages, your time, insurance, admin, and any other unseen overheads of running a business.
At the very least, prices should meet your break-even point but sustainable businesses build in margin. Profit is what gives you resilience and longevity. Without it, you’ll always feel like you’re running to stand still.
2. Customer Perception of Value
Value extends well beyond the hours spent on client delivery. A report might take three hours to prepare, but if it enables a client to make a decision worth hundreds of thousands of dollars, the value far outweighs your time.
Your price reflects the expertise, speed, risk reduction, and certainty you bring. Years of experience, knowledge, and investment allow you to create outcomes quickly and effectively. That is what clients are paying for.
3. Market Position
Where do you want to sit in your industry? At the premium end, offering trusted expertise at a higher price? Or accessible to startups with lower-cost options?
Neither approach is wrong, but you need to be deliberate. The weakest position is being stuck in the middle. Not the cheapest, not the best, just blending into the noise. Your pricing should align with your positioning strategy..
Value Beyond Hours
The most effective shift any service based business owner can make is to stop charging purely on an hourly basis and start charging based on value.
Clients are buying outcomes, certainty, and problem-solving. They are paying for expertise that helps them avoid costly mistakes. If your skill allows you to solve a problem in one hour that would take your client ten, that’s a reflection of value.
Your availability and capacity also create value. If you can only serve a limited number of clients, each slot becomes more valuable as demand increases. A waitlist is often a clear sign that it’s time to raise your prices.
Avoiding the Discount Trap
Discounting is a common reflex when facing pricing pressure, but it quickly erodes value and profitability. Once you discount, you train clients to expect it.
Instead of cutting price, consider trading value:
Reduce the scope of work.
Extend timelines.
Adjust deliverables.
This approach maintains price integrity while offering flexibility. Protecting your margins is critical for long-term sustainability.
Debunking Pricing Myths
Several myths hold business owners back:
“Higher prices scare clients away.” In practice, higher prices often attract clients who value quality and are more committed.
“You have to match competitors.” Most competitors are guessing too. Market awareness is useful, but your pricing should reflect your own value and positioning.
“Prices should only rise once a year.” Pricing can be adjusted whenever your value increases. For example, new skills, higher demand, or scarcer capacity all justify a review.
Financial Metrics to Guide Pricing
While pricing has an element of art, there are financial measures that bring science to the process:
Customer Acquisition Cost (CAC): How much does it cost to win a client? If CAC is $1,000 and the client only spends $1,100, profit will be tight.
Lifetime Value (LTV): What is the total revenue you earn from a client across their time with you? A healthy ratio is when LTV significantly outweighs CAC.
Runway and Burn Rate: How long will your cash last, and how quickly are you spending it? Pricing must support a sustainable runway.
These metrics provide the reality check to ensure your pricing model works.
Practical Steps to Raise Prices
If you suspect your pricing is too low, take gradual steps:
Start with new clients. They won’t know previous rates, and your experience justifies a higher price.
Communicate with existing clients. Provide notice and frame increases around outcomes and value delivered.
Offer packages or tiers. This allows clients to choose a level of support while protecting your core value offer.
Resistance is normal, but it’s also a sign that you’re approaching the true value of your work. If nobody ever objects, you’re probably undercharging.
An Art and Science
Pricing blends art and science. The science is knowing your costs, margins, and financial metrics. The art is in positioning, storytelling, and communicating value.
When you approach pricing with this balance, it becomes a strategic lever to build a sustainable, profitable business.
The next time you review your pricing, ask yourself:
Am I covering costs and building in profit?
Am I clearly showing value beyond hours?
Am I positioned where I want to be in the market?
Answering these questions with confidence turns pricing into a natural part of building a thriving business.