Pricing strategy

Price is the most powerful lever in the whole business model. A small change in price hits the bottom line directly, at no cost to produce. Yet most founders set price by guessing or by looking at a competitor. This lesson gives you three ways to think about price — and one way to test it.

Three ways to set a price

• Cost-based: you add a markup on top of your costs. Safe and simple, but dangerous: the price says nothing about what the customer is actually willing to pay, and you may leave money on the table.
• Competition-based: you price relative to the alternatives. Useful as a reference, but if everyone just copies each other you end up in a price war no one wins.
• Value-based: you price according to the value the customer receives. If your product saves the customer 10,000 NOK a month, a price of 1,500 NOK can still be a great deal for both. This is almost always the best approach — but it requires that you understand the customer's value.

Most people should start with value-based thinking and use cost as a floor (you can't lose money on every unit forever) and the competitor as a reference (not the answer).

Willingness to pay and pricing psychology

Willingness to pay is the highest price a customer would say yes to. It is rarely a single number — it varies between customers. So you always "leak" some value: some would have paid more than you charge.

A few psychological effects are worth knowing:

• Anchoring: the first number the customer sees colors everything after it. Show an expensive package first and the next one seems cheaper.
• Framing: "under 20 NOK a day" feels smaller than "590 NOK a month", even though it is almost the same.
• Choice overload: too many options paralyze. Three is often enough.

Use this to communicate value honestly — not to trick people. Customers who feel tricked churn.

Packages and segmentation (good–better–best)

Because willingness to pay varies, you rarely make the most from a single price. The solution is often three packages: a basic one, a most-popular one and a full one. Those who want little get an affordable option. Those who want everything pay for it. The middle one often becomes the anchor people choose.

This ladder lets the same product earn money from several segments at once, without you having to build three different products. Just make sure the differences between packages are clear and feel fair.

Test price without just guessing

You don't have to guess. Some simple tests:

1. Ask about value, not price. "How much does this problem cost you today?" reveals more than "what would you pay?".
2. Show price early. Put a concrete price on the landing page and measure how many click "buy" before you have anything to sell.
3. Test two prices side by side on different visitors and compare the share who complete.

A common finding is that founders price too low out of fear of scaring people off. If almost no one objects to the price, it is probably too low.

Remember too that price is not just a number — it is a signal. For a professional B2B customer, a price that is far too low can raise doubt about whether you are serious enough to be trusted with something important. Sometimes demand actually rises when you raise the price, because the price itself says something about the quality. Test upward in small steps and see where willingness to pay really turns, instead of assuming that "cheap" always wins.

Do this now

Write down today's price and which of the three approaches it really rests on. Then build a simple good–better–best proposal with three packages, and formulate one value-based sentence that justifies the price of the middle one. Test the sentence on one potential customer this week.