Do not use cost-based pricing (cost plus markup) in your startup. It is a very bad pricing strategy. Because customers do not buy your products because of how much it costs you to produce them, using the “cost of production” component to drive your pricing is an own-goal. When you price, follow the value-based pricing strategy. There, you focus on your ability to fix the frictions customers have through the products and services you have created.
In elementary physics, friction is a force. To overcome friction, you need another force. In the market, customers’ problems are market frictions. To overcome them, you need to create products and services – the most powerful forces in market systems.
It is the value you create that customers buy, and not how much it costs you to produce the force (i.e. the product or service). Communicate VALUE in the market and thrive. At Tekedia Institute Mini-MBA, we have many pricing courses including these two:
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
- Effective Product & Service Pricing, Accelerated Revenue, Profit Maximization – Saima Khan, Partner, Strategic Pricing Management Group, Toronto, Canada
- Driving Profitable Growth, Marginal Cost, Scaling – Ndubuisi Ekekwe
---
Register for Tekedia Mini-MBA (Feb 10 - May 3, 2025), and join Prof Ndubuisi Ekekwe and our global faculty; click here.