The Secrets You Must Know to Pricing Your Products or Services Competitively

You’re ready to start your side hack, your business, your entrepreneurial journey.

But what price should you set for your products or services?

Sounds like an easy question but it perplexes business owners all day long.

Welcome to Life by Design 360 Thoroughly Business Thursday, where we turn your challenges of starting the right business into opportunities and success.

I’m Doug Reed, and today, we’re diving into one of the most crucial aspects of starting and launching a successful business—pricing your products or services competitively.

If you’ve recently been laid off and are taking the leap into entrepreneurship, this episode is for you.

I’ll show you why competitive pricing matters, how to set the right price, and how it can set the foundation for long-term success.

It’s usually not about being the lowest price either, not at all. Today, I’ll show you the secrets you must know about getting your pricing and your income from your enterprise right at the start.

Let’s get started!

 

Let’s begin with a fundamental question: why is pricing so important when starting a business?

Pricing is more than just a number on a tag or invoice. It’s a signal—it tells your potential customers about the value of your product or service, positions you in the market, and directly impacts your ability to generate revenue.

For new entrepreneurs, especially those stepping into business after a layoff, pricing can make or break your venture. Here’s why:

1. Attracting the Right Customers – Pricing helps define who your target market is. A price that’s too high might scare off potential customers; too low, and you risk undervaluing your offering and attracting bargain hunters who may not be loyal.
2. Building Trust and Credibility – Competitive pricing helps establish trust. If your prices align with the perceived value and market standards, customers are more likely to trust your brand.
3. Ensuring Profitability – Ultimately, you’re in business to make a profit. A well-thought-out pricing strategy ensures that you cover costs and generate the income you need to sustain and grow your business.

 

 

Now, let’s talk about what happens if you get pricing wrong—and believe me, it’s more common than you think.

1. Underpricing – Many new entrepreneurs make the mistake of underpricing their products or services to attract customers. While this might work in the short term, it’s unsustainable. You may end up working harder for less money and struggle to cover your costs.
2. Overpricing – On the flip side, setting prices too high without establishing clear value can alienate potential customers. They might turn to competitors who offer similar products at more reasonable prices.
3. Eroding Your Brand’s Value – If your prices don’t align with the quality or value you deliver, it can damage your reputation and make it harder to retain customers.

The good news? You can avoid these pitfalls with a little research and strategic planning.

 

Let’s get into the nitty-gritty of pricing your products or services competitively. Here’s a step-by-step approach:

Step 1: Understand Your Costs

Your pricing has to cover all your costs—both fixed and variable—and leave room for profit. Fixed costs include rent, utilities, or salaries, while variable costs are tied to the production of each item or service, like materials or time.

Step 2: Research Your Market

Look at what competitors in your niche are charging. Pay attention to the quality of their offerings compared to yours. This will help you determine where you can position yourself—whether that’s matching the competition, going slightly lower, or charging a premium for added value.

Step 3: Know Your Unique Value Proposition (UVP)

What sets you apart? If you’re offering something unique—faster service, better quality, or exceptional customer care—you can justify higher prices. Your UVP is your secret weapon in pricing.

Step 4: Test and Adjust

Pricing isn’t static. Launch with an introductory price, gather feedback, and monitor sales. Adjust as needed based on customer response and market trends.

Remember, pricing is both an art and a science. Don’t be afraid to experiment and refine.

 

Competitive pricing isn’t just about the launch phase. It’s a strategy that can set your business up for long-term success.

1. Build Customer Loyalty – Fair and transparent pricing helps build trust and encourages repeat business. Loyal customers are often willing to pay a little more because they know and trust your brand.
2. Stay Agile – The market is always evolving. Regularly review your pricing strategy to ensure it remains competitive and profitable. Keep an eye on trends and be ready to adapt.
3. Communicate Value – Pricing is closely tied to how well you communicate the value of your offering. Use your marketing channels to educate customers on why your product or service is worth the price.
4. Invest in Quality – As you grow, reinvest in improving your product or service. Higher quality can often justify higher prices and attract a more loyal customer base.

 

Dan Kennedy, one of the best known and respected business mentors and one I have spoken to personally and deeply admire advises against competing on price, suggesting that you should never strive to be the cheapest, but instead focus on creating a unique product or service that positions you as a premium or category-of-one offering.

He argues that it’s often more profitable to price higher, as many customers are willing to pay more for quality and exclusivity, and a lower price can attract the wrong kind of client.

To avoid underpricing, he recommends pricing based on the value you provide and the client’s perceived value, rather than on costs or what competitors charge.

Here are 7 Key principles for pricing according to Dan Kennedy that you should live by:

• Don’t compete on price: Avoid being the “second cheapest.” There is no strategic benefit to it, and you risk a race to the bottom.
• Be the most expensive: Aim to be the most expensive option by becoming a unique category of one. This allows you to be compared to “apples to oranges” rather than direct competitors.
• Price based on value, not cost: Your price should reflect the value and results you deliver, not just your costs or industry norms. Price has little to do with the “objectively measured intrinsic value” of the item, but a lot to do with perceived value.
• Focus on a “starving crowd”: Find a market that is eager and ready to buy. Kennedy says it’s more important to find a hungry market than to have the best location or low prices.
• Use price to attract better clients: A higher price can attract higher-quality, more profitable clients and deter those who are only interested in the lowest price.
• Charge what you’re worth: Don’t be afraid to price higher than you feel comfortable. By adding more value, you can justify the higher price and leave money on the table if you don’t.
• Avoid discounts: Frequent discounting focuses the customer’s attention on price rather than the value you provide.

 

As we wrap up, let’s recap. Pricing your products or services competitively is crucial when starting a business.

It helps you attract the right customers, build trust, ensure profitability, and position yourself for long-term success.

If you’ve recently been laid off and are starting fresh, take the time to research, plan, and test your pricing strategy.

Remember, it’s not just about being the cheapest option—it’s about delivering value and building a sustainable business.

 

Thanks for tuning in to Life By Design 360.

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Tomorrow, I’m going to introduce you to others that did it. Started their own side hack, built it into a thriving business and are now set for the rest of their lives.

You’ll know their insider secrets that can help you to do the exact same thing!

Until next time, keep leaping forward and building the business, the income, and the life of your dreams!