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My initial foray into entrepreneurship in 2020 began with me undercutting my competitor’s price while providing a higher quality service. It was a great deal for my new clients, but a terrible strategy for my business. I wound up with a net loss that year. Then, after learning about pricing strategies through the University of Florida’s MBA program, I adopted a new model and saw topline revenue growth of 54%, was profitable that next year, and I didn’t have to increase the volume of clients to make ends meet. Oh, and I retained more than 90% of my clients.

If you’ve ever hesitated before pricing your new product or service, you’re in good company. For entrepreneurs, especially in the early stages, pricing can feel like guesswork. Charge too little, and you undercut your worth (and profitability). Charge too much, and you risk scaring off potential customers. But what if I told you that pricing is less about numbers and more about perception and positioning?

In the final part of the Marketing stage of the Build a Savvy Startup framework, we move past logos and lead magnets to talk about something much more powerful: how your pricing tells the story of your business. Not a lot of people know that pricing is actually a component of your marketing plan. Well, now you know, so let’s shift how you think about pricing and give you some tools—including a savvy AI-powered one—to create a strategy that works.

Here’s your Savvy Startup Mindset Shift:​
​Stop asking, “What’s the cheapest I can offer this for?” and start asking, “What pricing structure positions me as a solution worth investing in?”

Pricing isn't just about affordability—it's about the message it sends.

🔑 Step 1: Determine Which Pricing Strategy Fits Your Company

There is no one-size-fits-all method for setting prices. Your pricing strategy should be influenced by your product, your audience, your industry, and the experience you want to create. Here are a few pricing models to explore. You can even blend some of them together, which is what I did, to make a custom strategy for your business:

• Cost-plus pricing: You calculate your costs and add a markup. Simple, but not always competitive.
• Value-based pricing: You price based on the perceived value to the customer. This works especially well in service-based or high-end product businesses.
• Penetration pricing: You intentionally start low to enter the market quickly, then raise prices over time.
• Premium pricing: You price high from the beginning to communicate luxury or exclusivity.
• Freemium or tiered pricing: Often used in digital products, this lets users try a version of your offering for free or at low cost before upgrading.

You could say that my initial entry into the market used a penetration pricing strategy. It worked well because I got a lot of traffic in the door that first year. Why wouldn’t clients want higher quality service at half the price?! I was naive and desperate at the time, and clearly didn’t think I was worth a lot. After taking the Marketing course at UF MBA, though, I incorporated a value-based model and blended it with tiered pricing, using The Good-Better-Best Approach to Pricing by Dr. Rafi Mohammad. Highly recommend this for CPA firms of all sizes, by the way! I’ve implemented this same model at other CPA practices, too, and they’ve seen explosive top-line revenue growth. It’s a real game-changer.

🧱 Step 2: Understand and Avoid Commodification

When your product or service becomes a commodity, it competes solely on price. That’s a race to the bottom. To avoid this, infuse your brand with value beyond the product. This could be:

• Your customer service experience
• Your brand’s story or mission
• Your packaging, presentation, or delivery process
• Access to community, support, or premium features

If customers can’t tell the difference between you and your competitors—except on price—you haven’t built enough differentiation.

Here’s another Savvy Startup Mindset Shift:​
​Price competition is a sign of indistinct value. Create an experience, not just a product, and the client will come through the door and never leave.

🧠 Step 3: Segment Your Audience by Willingness to Pay

Not every customer will be willing—or able—to pay the same price for your offering. That’s okay. In fact, it’s strategic.

Segment your audience using these factors:

• Demographics: age, income, industry
• Psychographics: values, behaviors, buying motivations
• Purchase history: how often they buy, what they’ve spent before
• Urgency: how quickly they need your product or service

You might offer basic, mid-tier, and premium versions of the same product to serve different segments of your market. You can use tools like Google Forms or Typeform or Microsoft Forms to survey your audience. Ask questions about what features they value most—and what they’d pay for them. Then analyze the data to design price tiers accordingly.

Consider this Savvy Startup Mindset Shift:​
​Your product doesn’t need to be for everyone—it needs to be priced for the right ones, your target market.

💡 Step 4: Attract Higher-Value Buyers Using the Attractiveness Method and Attractive Pricing

What makes someone willing to pay $50 for one product and $500 for another that looks similar? Perception of value, status, and outcome. Position your brand in the premium lane. That means aligning your visuals, messaging, customer experience, and yes—your pricing—with what your high-ticket buyers expect.

Here’s how to appeal to higher-value buyers:

• Emphasize transformation, not features: Focus on what your product does for the buyer. Does it save time, reduce stress, increase revenue?
• Create high-touch offers: Offer white-glove service, customization, or exclusive access.
• Raise your baseline: Sometimes, higher prices signal higher value. Don’t be afraid to charge what your offering is truly worth.

What about attractive pricing? Why do customers tend to buy at prices that end in 9 or 7 versus 0? Look at the psychological factor called left-digit pricing. If you list your price as $499 versus $500, your brain is going to naturally lean towards the 4 because it is less than 5. Even though there is only a one-dollar difference. This concept is utterly essential to consider when you price your product or service.

Savvy Startup Mindset Shift on the Attractiveness Method:​
​You’re not pricing for where your business is now—you’re pricing for the impact and transformation you offer.

🤖 AI Action Item: Use AI to Analyze Competitor Pricing and Customer Willingness

Working smarter, not harder is the name of the game in business. Try using this prompt with ChatGPT (or your favorite AI tool) to help you speed up the process of setting your price.

Prompt:

Want to go deeper? If you have customer survey data or product features outlined, feed those into AI tools like ChatGPT Advanced Data Analysis to build models that simulate how price changes could impact conversion rates and revenue. This not only saves you time—it brings clarity backed by data.

Run the AI prompt above for your business and review the pricing tiers it suggests. Pick one and test it for the next 30 days. Track conversion, feedback, and revenue—and be ready to adjust. Pricing is never final; it’s an evolving part of your strategy.

Recap: Your Pricing Sets the Tone

Pricing is more than numbers on a spreadsheet. It defines how people perceive your business, the kinds of customers you attract, and ultimately—your profit margins. Remember, the cheapest company isn’t always the most successful. But the most strategic ones? They understand that pricing is a signal. One that says, “I’m worth it.”

So, as you complete the Marketing step of your startup journey, take a bold, savvy approach to pricing. You’ve done the research, mapped your customer journey, and differentiated your brand. Now, it’s time to claim your value.

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Stay savvy,

Caroline

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