What's wrong with cost-plus pricing?

It ignores what customers value, often leading to underpricing. It also miscalculates volume and fixed costs, leaving money on the table.

Why is lowest-price strategy dangerous for small businesses?

Larger competitors have deeper pockets and will outlast you in a price war. It also erodes perceived value.

How high should I price?

As high as the market allows. Your price should reflect true value delivered and customer perception, without hitting the market's absolute ceiling.

Setting your 1 Million Pricing Strategy

You’re sitting at your kitchen table, staring at the numbers. Revenue looks good, but the bank account feels tight. You’re not alone. Many founders hit this wall, not because their product is bad or their team is weak, but because their pricing strategy is off. It’s the silent killer of cash flow, turning a potential $1 million year into a constant scramble. A miscalibrated pricing strategy starves a business, but the right one fuels its entire operation.

Top 3 Common Pricing Mistakes

"cost-plus" pricing: You set prices by adding a margin to your costs. This often means you underprice, leaving money on the table. It ignores what customers actually *value* in your product or service.
Plus, if you don't factor in volume and fixed costs correctly, your unit cost can push prices higher than what the market will pay.
Lowest pricing: Chasing market share with the lowest price puts you in a weak spot. Larger competitors have deeper pockets. They'll outlast you in a price war. This strategy often kills small businesses.
It also erodes the perceived value of your offering, making profitability a constant uphill battle.
Pricing to meet goals and seal deals: This puts your sales team in a tough spot. Customers learn to negotiate hard for the lowest price. They'll wait for last-minute discounts before ordering. This behavior crushes perceived value and leaves cash on the table.

Setting your $1 Million pricing strategy

You can hit a million in sales in different ways. A low-priced product might attract more buyers, but it demands huge effort. Think about the investment in time, infrastructure, and sheer volume. The graph shows it clearly: at a $7 price point, you need to move 142,827 units to reach $1 million.

Now, consider the hidden costs. Supporting that many sales means massive investments in transaction monitoring, customer service, and automation. Small businesses often miss these when they price low.

Look at the graph again. The unit count drops dramatically as your price climbs. Which path feels easier for a small business: selling 142,827 units or just 100?

My point isn’t that everyone should sell $1 million units – though why not? It’s that when you launch a new business, aim to price as high as the market allows. Your price should reflect the true value you deliver and what customers perceive, without hitting the market’s absolute ceiling.

Higher prices don’t just accelerate profitability. They also deepen your customer understanding. With fewer customers, it’s easier to know them intimately. You can tailor services and products to their exact needs. This builds loyalty, strengthens your brand, and opens new market opportunities.

Does that million in sales feel a bit closer now?