The Three Pricing Errors

Small businesses typically price in one of three wrong ways:

  1. Cost-plus only — adding a percentage to cost without considering the market.
  2. Copying competitors — assuming your costs and value are the same as theirs.
  3. Guessing — charging what "feels right" without any calculation.

A Better Framework

1. Know your true cost

Include materials, labor, transport, packaging, rent contribution, and your own time. Most small businesses underestimate this.

2. Understand your value

What problem does your product solve? How urgently does your customer need it? What alternatives do they have?

3. Check the market

What are similar products charging? Are you positioned as the cheapest, the fastest, the highest quality, or the most convenient?

4. Test and adjust

Start at your calculated price. Watch customer response. Adjust based on real data, not fear.

Do not compete on price alone. Compete on value — and charge accordingly.