Starting a new business usually means thinking a lot about your prices. Price strategy is basically your game plan for how much you charge and why. It’s not just picking a number that “feels right”—there’s a lot behind it.
For new businesses, price is one of the biggest decisions early on. Set prices too high and you might scare people away. Too low and you might not survive. It’s usually more about finding a balance that works both for you and for your customers.
II. Understanding Costs
Before you set any price, spend some time figuring out your costs. You’ve got two main types: fixed and variable.
Fixed costs are the things that don’t change much, no matter how much you sell. Think things like rent, insurance, or your website hosting fees. You pay these whether you sell one unit or a hundred.
Variable costs are tied to each sale. If you’re selling a product, it’s the stuff like materials, packaging, or shipping. If you’re offering a service, it might be tools, software subscriptions, or contractor hours that only happen when you get a client.
There’s also something called break-even analysis. This is figuring out how much you need to sell to cover all your costs. It gives you a lightbulb moment: now you know your absolute minimum sales target and you’ll know if your pricing even makes sense long-term.
III. Market Research
Setting your prices without looking at competitors is like driving with your eyes closed. You want to know what others are charging for similar things. Are you more like the budget shop or the fancy boutique? This tells you a lot.
At the same time, you should get a feel for customer demand. Are people price-sensitive, or are they willing to pay more for better service or nicer packaging? Surveys, social media polls, or just talking to likely buyers help more than you’d think.
Market trends are the final piece. Sometimes everybody’s lowering prices, or maybe the trend is moving toward higher quality at a premium cost. Paying attention here can save you from accidentally sticking out in a bad way.
IV. Choosing a Pricing Model
Once you know your costs and your market, it’s time to pick how you’ll set your actual prices. There are a handful of common approaches.
Cost-plus pricing is the classic. It’s just your cost, plus a markup for your profit. So, if your gadget costs $5 to make and you add $5, you’re selling at $10. This works, but it doesn’t always account for what customers are willing to pay.
Value-based pricing shifts the focus. Here, you figure out what the product is worth to your customers, not just what it costs you. If you’re selling peace of mind (like an easy-to-use software for small businesses), people may pay more than your costs plus a fixed margin.
Competitive pricing means keeping your prices in line with what similar businesses are charging. If everyone sells coffee for $3, and you price at $7, you better have a compelling story (and maybe really great coffee or comfy chairs).
Penetration and skimming pricing are both about timing. Penetration pricing sets prices low at first to attract buyers and build a base quickly. Later, you raise prices once people love your product. Skimming is the other way: start high, get early adopters who don’t mind the price, then lower it later to attract everyone else.
V. Aligning Pricing with Business Goals
It’s easy to get stuck thinking about pricing as just math. But pricing should match your business goals, too.
Some new businesses want quick growth—maybe to impress investors or flood the market. Others care more about turning a steady profit right away. Your goals in the short-term might be different than where you want to land in a few years.
Your target market also matters a lot. Students on a budget? Tech professionals looking for convenience? What they’ll pay and what they value are really different. It’s worth picturing your ideal customer whenever you make a call on price.
Pricing tells its own story about your brand, too. Are you affordable and accessible, or premium and exclusive? Each approach pulls in a different crowd.
VI. Psychological Pricing Techniques
Even if you feel weird about “sales tricks,” the truth is: how you present a price changes how people see it.
Price anchoring is when you show a high “original” price next to your lower price. That makes the deal feel better. Stores do it all the time with “Was $50, now $30.” Customers almost instinctively compare the two.
Charm pricing is common because… well, it works. Prices ending in .99 or .95 seem lower than they are, even if it’s just a cent or two. So, $9.99 sells better than $10. That small tweak nudges shoppers.
Bundling combines products together for one price. Think “buy one, get one half off” or subscription boxes. People like feeling they’re getting more for less. It increases average sales and lets you move more product with less friction.
VII. Monitoring and Adjusting Prices
Here’s the thing: the price you start at usually isn’t the price you end up with.
After launch, watch how customers react. If things are flying off the shelves, maybe there’s room to raise prices. If you’re barely getting bites, is it the price, the product, or the way you’re explaining things?
The outside world can mess with your pricing, too. Rising costs, new competitors, or changes in supply all force a rethink. Sometimes a small tweak is enough. Other times, you need a bigger overhaul.
Feedback is gold here. Customers will tell you, directly or indirectly, if your price feels right. Pay attention to complaints, reviews, social media chatter, and just plain sales data. Improving is a never-ending job, but it keeps your business healthy.
If you want a real-life example of how a young brand thinks about pricing strategy and updates their approach, check out Jjajayo. They regularly tweak their prices and explain their reasoning to customers, which helps build trust and community.
VIII. Conclusion
Pricing is rarely a one-and-done decision for any new business. You’ll test things. You’ll learn from what works—and what doesn’t.
Know your costs down to the penny. Keep an eye on competitors, but trust your understanding of your customers too. Pick a pricing model that fits your style, your market, and your growth plans.
Stay open to changing your prices as you go. There’s no perfect price forever. Success comes from being flexible and learning as you grow.
Most new founders find pricing stressful at first. But over time, you realize it’s just another way to get to know your market—and to keep your business moving forward.