Price the outcome, not your costs

Ask most founders how they arrived at their price and you will hear some version of cost-plus: here is what it costs me to deliver, here is the margin I want on top, that is the price. It feels responsible and it is quietly disastrous, because it anchors your price to the wrong thing entirely.

Cost-plus answers the wrong question

Cost-plus pricing answers the question can we make a profit at this number. That is a question about you. The question that actually governs whether a customer pays, and keeps paying through an increase, is can this price be defended by the value I receive. That is a question about them. When your price is anchored to your costs, every increase conversation becomes a negotiation about your costs, and your customer has no reason to care what your costs are. When your price is anchored to their outcome, the increase conversation becomes a maths conversation about their return, and that is a conversation you win.

Capture ten to thirty percent of the value you create

The practical heuristic is to price at 10 to 30% of the value you create. If your product saves a customer a hundred thousand a year, then ten to thirty thousand a year is a defensible price, because it leaves the customer with the lion's share of the gain they would never have had without you. This single move changes the entire emotional register of pricing. You stop asking what you can get away with and start asking what the outcome is worth, then taking a fair slice of it.

For a productised service or an AI tool the calculation is unusually clean. If the tool returns a founder ten hours a week, or recovers a hundred thousand of leaked revenue a year, then pricing at ten to thirty percent of that is not aggressive, it is conservative. And when you raise the price, you are not haggling, you are pointing at a number the customer already agrees with and adjusting your share of it. The conversation moves from how dare you to of course.

Under-pricing is a communication failure, not generosity

The deepest reason founders under-charge is that they mistake under-pricing for generosity. It is nothing of the sort. Truly innovative products tend to be systematically under-priced precisely because buyers are ignorant of the product's value, they have no reference point and cannot yet see what it is worth. The founder, standing inside the value every day, assumes it is obvious and prices low to be fair. The customer, standing outside it, sees only an unfamiliar product and a number with no anchor.

So when your instinct says price low, interrogate it. That instinct is almost never a market signal telling you the value is small. It is a value-communication failure telling you the value is invisible. The fix is not to charge less, it is to make the value legible, then charge a fair share of it. Charging properly is not greed. It is what funds the better product your customer actually wants you to build.