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About Pricing.

Australian 100 dollar notes. Rawmarrow blog post on pricing.

So you’ve decided to go into business, it’s exciting but then you realise you will be charging for your products and services. For new businesses they often ask us if their prices are too high or too low – they are not confident in their pricing. Pricing when starting out can become a major headache for new business owners.

woman with headache- rawmarrow blog post on pricing.

The headaches are worsened when the foundational work on their business hasn’t been done. 

Sometimes clients come to us and say they looked at a competitor business prices and based their pricing on that. This is not necessarily the way to go as they way they operate their business (and their costs) may be entirely different from yours.

Let’s say you make doughnuts, and you haven’t yet done any foundational work on your business, such as calculating your costs and understanding your target market. You decide to base your pricing on the prices of a near doughnut maker that you see as a competitor. However, you don’t realise that the other doughnut maker uses higher-quality ingredients and has lower overhead costs than you do. 

It’s great to do research on competitors pricing however, you should not be basing your pricing on your competitors prices.

graph ascending with $ sign. Rawmarrow blog post about pricing pic.

When prices are set too high, customers may perceive the products or services as unaffordable, deterring them from making a purchase. This can lead to a decrease in demand, lower sales volumes, and ultimately, reduced revenue. Moreover, high prices may also drive customers towards competitors offering similar products at lower prices.

descending graph with dollar sign. rawmarrow blog post on pricing pic.

On the other hand, setting prices too low can be equally detrimental. Although attracting customers with lower prices may initially boost sales, it can erode profitability over time. Insufficient profit margins restrict a company’s ability to invest in growth, hampering its long-term sustainability. Additionally, low prices might inadvertently give the impression of inferior quality, undermining the perceived value of the offerings.


If you have done work on your brand from the beginning this will help you ensure your pricing matches your brand.

Your branding is what sets your business apart from your competitors. It’s your unique identity and personality, and it’s reflected in everything you do, from your logo and website to your marketing materials and customer service.

Your pricing should also be compatible with your branding. This means that your prices should be consistent with the image you want to project to your customers. For example, if you have a luxury brand, you’ll want to charge higher prices than if you have a budget brand.

Here are a few tips for making your pricing compatible with your branding:

  • Consider your target market. Who are your ideal customers? What are their income levels and spending habits? Once you understand your target market, you can set prices that are affordable and attractive to them.
  • Consider your brand values. What are the core values of your brand? Do you want to be seen as a high-quality, premium brand, or a more affordable, value-for-money brand? Your pricing should reflect your brand values.
  • Consider your competitors. What are your competitors charging for similar products or services? You want to be competitive, but you also don’t want to undercut yourself.

Here are a few examples of how to make your pricing compatible with your branding:

  • A luxury brand could charge higher prices for its products, and offer exclusive discounts to members of its loyalty program.
  • A budget brand could offer lower prices on its products, and offer volume discounts to customers who buy large quantities.
  • A brand that focuses on sustainability could charge higher prices for its products, but offer discounts to customers who bring their own reusable packaging.

By making your pricing compatible with your branding, you can create a consistent and seamless experience for your customers.


Pricing your products or services is one of the most important decisions you’ll make as a small business owner. It’s essential to find the right balance between covering your costs and making a profit, while also being competitive and attractive to customers.

Here are a few tips on how to price your products or services:

Understand your costs.

The first step is to understand all of the costs associated with producing or delivering your product or service. This includes direct costs, such as the cost of materials and labor, as well as indirect costs, such as overhead and marketing.

Research your market.

Once you know your costs, you need to research the market to understand what customers are willing to pay for similar products or services. You can do this looking at competitor prices, conducting surveys, and talking to customers directly.

Consider your value proposition.

What makes your product or service unique and valuable to customers? Once you understand your value proposition, you can position your pricing accordingly. For example, if you offer a premium product or service with exceptional customer service, you can charge higher prices.

Set your target profit margin.

Your target profit margin is the percentage of profit you want to make on each sale. This will depend on a number of factors, such as your industry, your costs, and your desired level of profitability.

Calculate your price.

Once you know your costs, target profit margin, and value proposition, you can calculate your price.

This is a simple formula:

Price = (Cost + (Target profit margin * Cost)) / (1 – Target profit margin)

For example, if your cost is $10 and your target profit margin is 20%, your price would be $12.50.

To strike the optimal price point, businesses must consider various factors such as production costs, market demand, competition, and customer perceptions. Conducting market research, analysing customer preferences, and understanding the value proposition of the products or services are essential steps in this process.

Regularly reviewing and adjusting prices based on market dynamics and customer feedback is also crucial. This flexibility allows businesses to adapt to changing market conditions and optimise their pricing strategies accordingly. Ultimately, finding the right pricing balance leads to increased customer satisfaction, sustained profitability, and long-term business growth.

Confident woman with $ sign. Rawmarrow blog post pic.


When you’re confident in your branding and pricing, you won’t need to justify your prices or be afraid of not making a sale or getting a customer. 

Not everyone is your customer.

Once you have calculated your prices, you can practice saying your prices with confidence. When you are talking to potential customers, be prepared to explain your pricing and the value that you are providing.

It’s also important to remember that you don’t have to justify your prices to anyone. 

If a potential customer is not willing to pay your prices, that’s okay. There are other customers out there who are willing to pay for the value that you are providing.

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