Entrepreneurs struggle with pricing based on expenses, not customer value
16 posts across 10 communities in the last 60 days; 25% from r/SaaS.
“When you stress test the the business plan are you asking potential customers how much they would pay? Would they pay today? Would they be a founding member? Do you give them a price scale to rate ? Customer surveys and interviews before launch with questions rooting out actual…”
“Most founders I talk to picked their price one of three ways: what felt reasonable, what a friend suggested, or what they'd personally pay. None of those are pricing strategies. The problem is you have no idea if you're 40% below what the market expects (leaving money on the…”
“I work sales for a lumberyard that sells cedar fencing materials. We do not mill and fabricate the fencing, we order it from a wholesaler, add our margin and then quote the customer. We ideally want to be selling full fences to contractors but the issue is that we are 50% - 75%…”
Several entrepreneurs express difficulty in setting prices, often starting with cost-based calculations or following rigid formulas. One user suggests basing price on the problem's cost to customers and incrementally raising prices until resistance is met, while another emphasizes avoiding lifetime offers to prevent revenue stagnation. The focus should be on customer value rather than internal costs.
SOURCES (35)
“I’d price based on the value to the customer, then test from there. A simple framework: pick a starting price, test it with 10–20 real prospects, track conversions and objections, then raise or lower it and repeat. If everyone buys without hesitation, you may be…”
“Hey entrepreneurs, Can you tell me more about how you make your decision when it comes to pricing? How do you come up with a price for your subscription plans / membership package? I start with a low price and then increase it by X% after getting X number of payments. submitted by /u/sumizeit [link] [comments]”
“Curious how mid-sized brands handle pricing. Do you use dynamic pricing tools? Is it mostly gut-feel and looking at competitor sites? Or are you just doing a blanket +X% markup when supplier costs go up? It seems like it would be incredibly hard to know which specific SKUs can handle a price hike without killing conversion. How do small business ecommerce owners manage this practically? submitted by /u/Silop7 [link] [comments]”
“Things I wish someone had explained simply when starting out: Pricing basics: markup vs. margin (most people mix them up), how to price so you actually cover costs, and when to raise prices. Payment fees: what Stripe, Square, PayPal, etc. actually cost on a real transaction, and how to pass fees on legally. Taxes for new owners: quarterly estimated taxes, self-employment tax, what records to keep, and when to get an accountant. Cash flow: invoicing, payment terms, chasing late payments, and keep”
“When you stress test the the business plan are you asking potential customers how much they would pay? Would they pay today? Would they be a founding member? Do you give them a price scale to rate ? Customer surveys and interviews before launch with questions rooting out actual value will help. People will be nice to our face and tell us it’s a good idea etc. Ask them if they would pay and how much reveals a different story. [re: How do you find a profitable problem space? (Long read)]”
“Last week a founder told me "I'm not going to sell it short, even if that costs me customers". I understood them, but I don't agree, and it took me a few days to work out why. The price starts to feel like you. After months building something, lowering it by a dollar feels like admitting something. But the person who leaves at $49 doesn't think less of you. They just don't pay, and you end up with the same price and one customer fewer. A discount for nothing is the real”
“Most founders I talk to picked their price one of three ways: what felt reasonable, what a friend suggested, or what they'd personally pay. None of those are pricing strategies. The problem is you have no idea if you're 40% below what the market expects (leaving money on the table) or 20% above what customers will actually pay (killing your conversion rate before you even start). The fix isn't complicated. Before you set a price, spend 30 minutes mapping what 4-5 competitors charge,”
“If your store sells a product that customers usually buy only once or has long buying cycle, how do you make it worth it? Do you target a higher margin, spend less on paid acquisition, or something else? I want to understand what sellers do when repeat purchases aren't a big part of the business. submitted by /u/Bloom-Analytics [link] [comments]”
“Someone made a post recently saying they have a Kickstarter campaign and are worried it won't be profitable because of their margins. They were wondering by how much they could reduce their COG. They estimated their COG would be around $60, and that's the first mistake. Don't estimate anything when it comes to product development. Get quotes on everything and find out how much it will actually cost you per batch. If the quotes come back higher than you expected, the only real guarant”
“Pricing is hard. Lots of variables go into it, including COGS, CAC, CTS, margin, and other factors. Then you have market sensitivity, competitor pricing strategies, marketing and promotion strategies, pricing and packaging strategies, discounting and so forth. I’ve done pricing councils at some pretty big orgs before and it’s extremely data driven and there a ton of decisions and sign offs to get to what the customer finally pays. Suffice to say, as a first time founder or even a repeat small te”
“the clients who negotiate hardest on the pilot price are usually the same ones who churn once it goes full price, that pattern tells you more than the price itself”
“I am interested to know how other small business owners realized they had reached that stage. Was there a specific moment or change in the business that made you aware of the need to increase prices? submitted by /u/ahad3107a [link] [comments]”
“That’s a great lesson. Underpricing can attract customers, but it can also make the business much harder to sustain. I think a lot of new business owners are afraid to charge based on the actual value they provide. Did you find it difficult when you eventually decided to raise your prices?”
“You could try to qualify them by asking their budget. I've literally heard "thats too expensive!" and "thats too cheap!" about the same product from two different prospects.”
“The ideal pricing is a function of the value that the customers of your product or offering perceive. And it is definitely not about thinking. Understanding the value in the eyes of the customers is about conducting Buyer Persona interviews with customers of yours, of your competitors (including DIY).”
“I work sales for a lumberyard that sells cedar fencing materials. We do not mill and fabricate the fencing, we order it from a wholesaler, add our margin and then quote the customer. We ideally want to be selling full fences to contractors but the issue is that we are 50% - 75% more expensive than all their current suppliers. Our fencing quality is VERY NICE, but there's is a limit to how much the contractors care about the quality versus what their own customers want to pay for it. Pretty m”
“Pricing usually felt right to me when new customers stopped saying “that’s expensive” and started saying “that’s it?” If people are getting clear ROI, raising prices is usually more about positioning than squeezing more out of them.”
“The key question: does the calculated price need to actually be paid at the end (added to cart), or is it a quote/estimate you follow up on? If it must hit the cart: look at the "product options" category on the App Store rather than form builders. Apps like Globo Product Options, Hulk, or Bold do multi-step conditional flows with image swatches and price add-ons, and the total carries through to checkout as line item properties. That last part is what generic form tools can't do.”
“When the category is new, I’d price the behavior rather than the product. Start with the decision the customer is replacing or the outcome they are trying to unlock. Then put several real offers in front of the same narrow customer group: perhaps a small refundable commitment, a paid concierge version and the complete product at a higher price. Don’t ask people what they would pay. Measure which offer they choose, what they compare it to and where they hesitate. I’d also end the early-adopter pr”
“most of us set our price the same way: screenshot a competitor's page, gut check it in a slack thread, land on $29/49/99, and move on. then the first real pricing data shows up weeks later as low conversion and a stalled funnel. the methods that actually answer this (van westendorp, gabor-granger, maxdiff, conjoint) have existed for decades. van westendorp is from 1976. the reason founders never used them wasn't the math, it was that generally, pricing research meant a five-figure consul”
“I've seen a lot of advice that says to increase prices regularly, but I'm curious how business owners actually decided it was the right time. Was it because demand increased, costs went up, you were booked out, or something else? If you've raised your prices, how did your customers react? Looking back, do you wish you'd done it sooner or waited longer? I'd appreciate hearing real experiences rather than general advice. submitted by /u/Adhnanmannathan [link]”
“I see way too many people worried about pricing before they launch... not sure if that worry is justified. I'd like to not overthink it and go with my gut feeling. Over time it may change (but yes I have fallen for this "let me just make it cheaper" trap before)”
“The two different methods that are relatively grounded would be to look at your competition for a market rate of a similar product and try and make that work in your budget Or the second method, if there are no comparable objects would be to add up your cost of living and attempt to derive what it would take for you to live whilst selling them. I see lots of artist type folks saying it takes months to paint or create something, but are they actually working an eight hour productive day on it or”
“If I may add my 2 cents.... Price is only an issue if value is absent. If you are genuinely solving a real problem for your customer and this isnt some tool that you created that works very well, but doesnt solve a real pain point for your customers, then you might need to pivot. You should always prioritize the business revenue, especially in your early stages of growth. Some of the biggest mistakes startup founders make is underselling. If you are bootstrapping and dont have any VC funding, th”
“Definition of price include cost of goods, cost of distribution, cost of marketing, sales, support, revision and returns. Then how many units and what time frame you take to actually make profit, comes the concept of break even.”
“My rule of thumb is to price based on the value you create, not the effort it took to build if your product helps someone make an extra $10,000 or saves 100 hours a year, they're not comparing your price to your development cost they're comparing it to the value they receive”
“I don’t think the first price needs to be the “right” price. When I started my first service business, I charged very little because I had no proof and no idea what people were willing to pay. That low price helped me get real customers and understand what they actually valued. Once demand became consistent, I raised the price gradually and watched the conversion rate, customer quality and total revenue. I’d use competitor pricing only as a reference. Similar services can create very different v”
“If you are running a B2C ecommerce company there are a couple of methods you can use. The first one is the Van Westendorp method, where you can ask around 20 customers 4 questions such as At what price would it be so low that you start to question this product’s quality? At what price do you think this product is starting to be a bargain? At what price does this product begin to seem expensive? At what price is this product too expensive? From the answers you get you will usually get a range of”
“I like to add, Setting a price high enough to make your time and effort feel well-rewarded. Setting a price low enough that your target market can actually afford it. Setting a price that matches the transformational outcome you deliver to the buyer.”
“Cost plus a margin to start honestly. Then adjust once you actually see what people complain about paying.”
“If there's no direct competitor, I'd price it against the problem you're solving, not your feature list. People don't compare categories, they compare their options. If your product saves someone 10 hours a month, they're really comparing it to what those 10 hours are worth, not whether another tool has the same features.”
“You either want to be the cheapest or the most expensive. That way price point is a part of the product (best price or luxury) Don’t fight for the middle ground”
“If you can quantify in monetary terms time saved and risk reduction for the average user of your product, I'd say that's your starting point. Before slapping it on I'd work backwards to make sure that value based price covers all your costs plus the margin you are looking to make, ~30% is a good start depending on your product. Then get feedback from the first few users, how much time did the product save you, what would it have cost you risk wise to not buy the product - adjust your”