The Three Things You Need to Know About Pricing Like a Pro

Pricing is one of the most intimidating decisions you’ll make as a business owner. It is not just about picking a number; it is about understanding human behavior, positioning your brand, and ensuring your business remains sustainable and profitable. The way you price your products or services influences how customers perceive your value, how much you can reinvest into your business, and ultimately, how successful your company will be.

So, let’s get into the three most important things you need to know about pricing—because when you get this right, it changes everything.

1. The Psychology of Pricing: How Customers Perceive Value

One of the biggest mistakes new entrepreneurs make is assuming that price alone is what drives customer decisions. But the truth is, pricing is deeply psychological. Customers don’t just buy something because it is cheap; they buy because they perceive it to be valuable.

Think about how people willingly pay $5 for a Starbucks coffee when they could get a similar cup at a gas station for $1. The difference isn’t just in the coffee itself—it is in the experience, the brand, and the perceived quality. That is the psychology of pricing at work.

How to Use This to Your Advantage

1. Price Anchoring

Have you ever looked at a menu where the most expensive dish is $60, but the one next to it is $40? That’s price anchoring. The $60 dish makes the $40 dish feel like a good deal—even if it is still on the pricier side. You can use this strategy in your business by offering different pricing tiers, which help guide your customers toward the option that feels “just right.”

2. Perceived Value Over Actual Cost

Customers aren’t always paying for what something costs you to produce—they are paying for what they believe it is worth. A Chanel handbag costs a fraction of its retail price to manufacture, yet people pay thousands because of the brand prestige, exclusivity, and experience that comes with it. In your business, you should focus on selling outcomes and benefits rather than just features or costs.

3. The Power of “9”

Studies have shown that prices ending in .99 or .97 feel significantly cheaper to consumers than rounding up. A product priced at $19.99 psychologically feels much lower than one priced at $20.

Bottom Line: Your pricing should reflect the value and experience you offer. It’s not just about numbers; it’s about psychology. Position your pricing so that it speaks to your ideal customer’s needs and desires.

2. Avoiding the “Race to the Bottom”: Why Competing on Price Can Kill Your Business

It’s easy to look at competitors and think, “If I charge less than them, I’ll get more customers.” And while that may work for a short time, this strategy is a long-term trap.

Competing on price alone is a dangerous game. Someone will always be willing to undercut you. If your only value proposition is being the cheapest, you will always be in a race that ends in razor-thin margins, exhaustion, and an unsustainable business.

Why You Should Focus on Value Instead of Price

1. Customers Who Buy Solely on Price Have No Loyalty

If someone chooses you just because you are the cheapest, they will leave the moment they find someone cheaper. On the other hand, when customers buy because they believe in your brand, your service, and the unique benefits you provide, they will stay with you—even if your prices are higher than the competition.

2. Higher Prices Can Attract Better Clients

It might sound counterintuitive, but when you raise your prices, you often attract better customers. People equate price with quality. If something is too cheap, they questi