It depends on what your customers can afford, what they think they should pay, and what you think they’ll pay. The actual price is somewhere between these three variables.

Pricing is one of the most important decisions in business. It can make or break a company. And yet hardly anyone knows how to do it well. Most companies, when asked how they know what price to charge for their product, will either say “We looked at our competitors”, or “We looked at what the market would bear.” If that’s all you know, then I’m sorry to tell you that you’re guaranteed to lose.

Pricing is one of the most important aspects of doing business. It is often the most difficult. Proper pricing is the difference between success and failure, between profit and loss. No matter what kind of company you’re trying to create, you will need to know how to price your product or service properly to succeed.

One problem I find people pay less attention to is the effect their pricing makes on their overall business well being. I see a lot of accidental pricing with the hope that luck will shine on them.