Pricing strategy is one of the highest-leverage decisions a startup can make. A 1% price increase has 3-4x more impact on profit than a 1% increase in volume. The three main approaches: Cost-plus (cost + margin), Value-based (what customer is willing to pay), Competitive (match/beat competitors).
Most startups underprice. Value-based pricing almost always yields higher revenue than cost-plus.
Key Takeaways
- Value-based pricing captures more revenue than cost-plus.
- Price at 10-20% of the value you create for the customer.
- Most startups underprice — test higher prices before lowering.
- 1% price increase = 3-4x more profit impact than 1% volume increase.