Communicate VALUE because that is what customers pay for; few care how much you have spent to create the product. Yes, do not use a cost-plus pricing (cost plus markup) model in your company. It is a very non-optimized pricing playbook. Customers do not buy your products because of how much it costs you to produce them. What they want is VALUE!
So, when you price, focus on value, and that means, use a value-based pricing model. Of course, as you do that, you need to understand your cost, including the fixed and variable costs.
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, the powerful forces in market systems. Products deliver value! Communicate VALUE, forget cost!
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Congratulations! You have built this awesome company. You have products and services, and now you want to price them. The pros discuss the constructs of cost-based pricing and value-based pricing: “Value-based pricing is the setting of a product or service’s price based on the benefits it provides to consumers. By contrast, cost-plus pricing is based on the amount of money it takes to produce the product”. Deciding the model to adopt for the optimal value creation, in your startup, is the next level as you fix the launch date.
You possibly have some marketing guys to assist. Marketing is a great profession. The bests in the field understand how to present their product offerings to customers to get them to open their wallets. Irrespective of the quality of the product or service, a very poor marketing campaign could be very disastrous. This field is full of psychology. They focus on mastering the behavior of man under his limited scarce resources. He must make choices and bring that concept of opportunity cost in action; and making sure your product wins in this choice makes a star marketer.
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