Small business owners are always hard-pressed to figure out how to set their prices. Being honest, pricing can be really easy or really hard — but for your online business, you have to learn the art of it, or you’ll go broke and your business will be no more.
Here’s a reframe to start with: a price is really just a made-up number. No one truly knows what something should cost — they just pay the number a business owner puts on it. Think about walking through the grocery store buying your usual items. How often do you stop to weigh the actual value of what you’re buying?
Every day, psychophysicists and small business owners test this. They nudge the price slightly, or they change the packaging so you pay the same but get less. Peanut butter jars that used to have flat bottoms now have an indent — less peanut butter, same price. Cereal boxes get millimeters thinner while looking identical on the shelf. And when you set prices for your online business, you’re doing the same thing: assigning a number to what you think someone should pay. Ever wonder how a business puts a “$497 value” on a free Facebook group? It’s all made up — the value is whatever that owner decided (or copied from someone else). So how do you set your prices so you don’t go broke? It comes down to three things.
1. Value yourself and your time
In my experience, so many business owners don’t value themselves or their time. They work all hours to please clients because they don’t want to seem unavailable.
But when you value your time, you can actually be more present for clients during set hours than you are trying to be available around the clock. Think of it as boundaries. Sometimes you need to step away and take a break — and you come back more productive because of it. It happens to me constantly: I take a weekend away and return with more ideas and better flow. The same is likely true for you.
Set your business hours and stick to them as much as you can. Learn to take time away, and learn to value yourself and your time — because no one can value you or your time more than you do.
2. Trust the prices you put out into the world
If you don’t have faith in the cost of your products and services, neither will your clients — and at the end of the day, they won’t buy. Or they will buy, and turn out to be far more work than you wanted to put into that offer.
Ask yourself: does what you’re selling deliver real value? Will it create a transformation for your clients? Whenever someone buys something that isn’t food or a necessity, they’re expecting a transformation of some kind — usually the one your sales page promises. When you know your offer is the real deal and your clients will genuinely make a change, then the price you set is a price you can learn to trust and stand behind.
3. Know your costs (the most important piece)
All three points matter, but this is the most important piece of the pricing puzzle.
How often do you actually sit down and calculate what it costs to produce a product or deliver a service? Be honest — for most people I talk to, the answer is never. And how many times have you seen a “six-figure launch” post that conveniently leaves out how much that launch cost to pull off?
When you factor in your costs and figure out how many units you need to sell to make a profit, that’s when you’re truly in business to make money — which should be your mindset from the very start. You always want to profit at the end of the day, but until you know what it costs to create a single product (not run your whole business — just that one product), you won’t actually know whether you’re making money.
Pricing gets easier once you do the work
Setting prices for your small business doesn’t have to be hard. We make it hard because we know what really goes into that made-up number. But remember — it is made up, and no one truly knows what anything costs; they just pay the number someone chose to put on it.
When you do the work to know your costs, and you value yourself and your time, and you trust your offer, pricing suddenly gets so much easier. What are you still struggling with when it comes to setting your prices? Share this post with a business-owner friend who could use the help.
This article is for general educational purposes only and is not legal, accounting, or tax advice. Always consult a qualified professional about your specific situation.