Rethinking Pricing: A Smarter Approach for Small Business Owners

I have a challenge for you:

Forget all the feedback you’ve ever received about the price of what you sell in your small business. Read this article to the end and give yourself permission to change the way you price your goods and services.

Forget the Feedback

Pricing feedback is often emotionally charged and biased. Customers will always want to pay less—and rarely tell you when something is too cheap. That means you can’t rely on feedback alone to set your prices.

You’ll sometimes hear that something is “too expensive,” or receive pressure to lower your prices. That’s normal—but it doesn’t mean your prices are wrong. In most cases, it’s best to leave past pricing feedback in the past.

Cost Plus Strategy

A strategy regularly employed by businesses is to estimate the cost of a good or service, add a profit margin, and then charge that figure. This is a solid starting point—and possibly what you’re already doing. It gives you a baseline of the minimum you should charge. But if you stop there, you’re probably leaving profit on the table.

Competition-Based Pricing

Know your competition—and know your business. It’s not enough to compare prices. You must understand the differences in your products or services and weigh up the advantages and disadvantages.

This strategy is useful for new businesses or in industries where competitor pricing is public and easy to benchmark. But it has limitations. If you base your pricing on what a large competitor charges, you’ll likely come unstuck. Big players enjoy purchasing power and economies of scale that give them massive pricing advantages you don’t have.

Value-Based Pricing

This strategy involves pricing your products or services based on the perceived benefit to the customer—in other words, what they’re willing to pay. If you can implement it well, it’s one of the most powerful approaches.

Here’s the catch: you never really know what a customer is willing to pay—until you increase your prices and see what happens. Value-based pricing requires bravery. But for the right type of business, it can transform your profitability and allow you to build a business that truly supports you and your family.

A Few Final Thoughts on Pricing

If your price is never “too expensive”, your pricing is too low. You can’t be everything to everyone. Get comfortable with customers sometimes saying no to what you’re offering. It’s not personal—it’s business. Reposition it in your mind as a win: a sign of the progress you’re making as a business owner.

Your business likely has advantages you’ve overlooked. Your location, your level of service, and your experience can all justify higher prices.

Marketing is a critical tool for shaping how customers perceive your value. If your marketing spend was nil last year, that needs to change. Even a small monthly budget can help you increase perceived value and command better prices.

Sometimes it’s not the price that matters most—it’s how the price is presented. Be transparent. Give people clear quotes and space to decide. A well-communicated higher price often feels more trustworthy than a vague, cheaper one.

Lastly - get some help. Your accountant could be a huge help in reviewing your pricing. Feel free to reach out if you are interesting in becoming a Flinn Accounting client and would like some help with your small business pricing strategy - Get Started