Insights — Strategy & Growth

How to price a new product: a founder's guide

Most pricing isn't wrong because of the number. It's wrong because nobody decided what the number was supposed to reflect.

If you priced your product at launch, there's a good chance you did one of three things: matched a competitor, added a margin to your costs, or picked a number that felt roughly right. None of those are wrong as a starting point — but none of them tell you whether the price is actually working, and most founders never revisit it once the business is moving.

Cost-plus tells you the floor, not the price

Cost-plus pricing (cost + margin) protects you from losing money, but it has nothing to do with what the product is worth to the person buying it. Two customers can get identical value from your product and have wildly different willingness to pay — cost-plus pricing ignores that entirely, and usually leaves real margin on the table with the customers who'd happily pay more.

Price against the value delivered, not the hours worked

Value-based pricing starts from a different question: what does this actually solve for the customer, and what's that worth to them? A tool that saves a business £50,000 a year in wasted spend can reasonably charge a fraction of that saving — regardless of what it cost to build. The work is in quantifying the value clearly enough that the price feels obviously fair, not in justifying your costs.

Test the price before you commit to it

You don't need a perfect number on day one — you need a way to find out if you're wrong quickly. A few practical ways to test:

Revisit it deliberately, not by accident

Pricing set at launch rarely still fits a business a year later — the product's improved, the customer's changed, competitors have moved. Put a date in the diary to revisit pricing on purpose, rather than letting it drift until a customer questions it for you.

The right price isn't the one that covers your costs. It's the one that reflects what the work is actually worth.

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