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    How a price is set, from the floor up

    We start from the lowest price your costs allow and test what buyers will pay. Then we choose the unit you charge for, and plan how the change reaches customers and the sales team.

    The cost architecture that a pricing firm has to excavate, we already hold. (read where we wrote it)

    What has to be settled before a price will hold?

    The price buyers will pay, the cost it has to cover, how you get there, and how you invoice. They are decided together, because each one limits the others.

    1. Target pricing

      What the market will pay, and the methodology behind the number rather than a guess dressed as one.

      • Prices set from what you are worth to the buyer and what rivals charge
      • Proof from your own customers of what they will pay
      • A target price with the assumptions written down

    2. Cost structure

      Direct and indirect cost, so the target price is tested against what it actually has to cover.

      • Direct costs for each product and sales channel
      • Shared costs split in a way that holds up to questions
      • What each sale leaves after its direct costs, at the price you plan to charge

    3. Pricing strategy

      How you enter the market with the target in mind, even where the first price is not the final one.

      • Start low, start high, or offer levels, chosen for your buyers
      • How you move from launch price to target price
      • Discount rules that do not undercut your price list

    4. Pricing models

      How the client is invoiced. A success fee sounds attractive until the team's salaries fall due before the success does.

      • Charging monthly, by use, on retainer, by milestone or on success
      • When the cash arrives under each one, not only the revenue
      • A way of charging your contracts and collections can actually handle

    Where does pricing work usually fail?

    At the last step, after the analysis is done. So the floor comes first and the change comes last.

    1. Establish what the cost structure allows

      The floor. What the business must charge to be viable at its current cost base, and how that changes with volume.

    2. Find what the customer will actually pay

      Willingness to pay tested against real buyers rather than inferred from a competitor's public price list.

    3. Choose the model, not just the number

      Per seat, per transaction, tiered, usage based. The model decides how revenue scales and it is harder to change later than the price itself.

    4. Plan the change

      Existing customers, contracts and the sales team all need a version of the story. Most pricing work fails at this step rather than at the analysis.

    What do founders ask about pricing?

    How do we know our pricing is wrong?

    The common signals are a win rate that is too high, discounting that has become routine, customers who never question the price, and a gross margin that does not improve with scale. Any one of them is worth investigating.

    Should we price against competitors?

    Competitor pricing tells you what the market is anchored to, not what you should charge. Pricing to a competitor's number imports their cost structure and their strategy into your business, and you can see neither.

    How often should pricing be revisited?

    At least annually, and always when the product, the cost base or the buyer changes materially. The most common failure is not pricing badly at launch, it is pricing once and never again.

    Will raising prices lose customers?

    Some, and that is usually the point. The question is whether the revenue gained from those who stay exceeds the revenue lost from those who go, and that is measurable before you commit to it.