Pricing strategy: you don't decide your price
Almost all prices are born in one of two places. Either in a spreadsheet: the costs, plus a margin that "seems reasonable". Or on the competitor's pricing page, with ten percent less to "be competitive".
The two methods have something in common: neither of them asks anything of the one who is going to pay. That is not a pricing strategy. It's two ways of avoiding one.
Your costs matter to nobody
The customer doesn't see your spreadsheet. They don't know how much the server costs you, how many hours you put into the product or which margin seems fair to you. And even if they knew, they wouldn't care.
The cost is your floor: below it you lose money, and that is worth knowing. But it is a number for you, not an argument for them. Setting the price from the costs is answering with great precision a question the customer hasn't asked.
The customer compares you with their alternative
What the customer has in their head when they see your price is not your cost. It is what they use right now in your place. An Excel sheet, a freelancer, an agency, a competitor, or doing nothing.
That alternative is the anchor. If the alternative is free, you are competing against free, and every euro has to justify itself. If the alternative is a five-figure agency, your price of forty-nine looks like a bargain, or a scam: both readings are possible, and which one wins depends on how you tell it. This is price anchoring in its honest form: not a trick on the pricing page, but the number the customer already carries in their head.
That's why the first question of price is not "how much do I charge?", but "what am I being compared against?". Until you answer it, any number is decoration. That is the whole of value based pricing: value is measured against the alternative, not in a vacuum.
Copying the competitor's price is copying their mistake
The competitor's rate is a data point, and it's useful. But it's a data point about them: about their cost structure, their positioning, their funding, their appetite for growing at a loss. It is not a data point about your customer's willingness to pay.
And the most important thing: you don't know whether it works for them. They might be losing money on every customer and paying for it with the funding round. Copying their price is inheriting their bet without having seen their numbers. Competitive pricing done like that is not a strategy, it's imitation.
Competitors' prices are useful for something else: for seeing where the market already expects the number to be. The cheapest credible one, the expensive one that still gets bought, and the gap in between. It's a map, not an answer.
Willingness to pay is already written down somewhere
The good news is that you almost never start from zero. What people are willing to pay leaks out in public all the time:
- In reviews. "Too expensive for what it does" and "worth every cent" are price data, not product data.
- In forums. Threads of the "does anyone know a cheaper alternative to X?" kind tell you exactly where the value breaks.
- In competitors' rate changes. Who went up, who went down, who added a free plan and a year later took it away.
- In what they already pay for the substitute. Freelance hours, overlapping subscriptions, the salary of the person who does it by hand today.
Price surveys, on the other hand, lie. Ask somebody how much they would pay and they'll tell you a number lower than what they would really pay, or a higher one to look good. What people do with their money says more than what they say they would do. Good pricing research starts from that behaviour, not from a questionnaire.
Three checks before putting down a number
- Write down the customer's alternative and what it costs them. In money and in time. If you can't write it down, you don't know your customer yet, and the price is the least of your problems.
- Find where the market already anchors. The competition's range, the cheapest credible option and the expensive option that keeps selling.
- Read what is said about the price in public. Complaints, "it's worth it", stories of people who switched. That is where the real border of value runs.
Afterwards, set the price as what it is: a hypothesis. And decide in advance which result would make you change it. Without that number written down beforehand, any data can be read as "so far so good".
A price that is too low is not generosity
There's a mistake that looks like prudence: going out cheap "to start with", and we'll raise it later. The problem is that the price is also a message. One that is too low tells the customer that not even you believe in what you're selling, or that there is a hidden trap.
And raising later costs much more than lowering. The first customers anchor on your first number, and the one who comes later compares with it. In saas pricing this is the most expensive mistake of all, because the first cohort often stays on the old price for years.
How to do it in hours, not weeks
Competitor research was made precisely for this: the real offers and prices, not the pricing page, and the hook they really use. And one report closes demand, competitors and the voice of the customer, including what people say about price, with links to the sources.
Neither of the two sets the number for you. Both tell you what you are going to be compared against.
Conclusion
The price is not a formula and not a copy. It is a hypothesis about the customer's alternative. Treat it like any other hypothesis: with data before launching it, and with a written number that can kill it.
