The psychology of pricing: how do you determine the perfect price for your product or service?
March 2025 - Many entrepreneurs think that a low price gives them a competitive advantage. But did you know that being too cheap can have just the opposite effect? Customers often associate price with quality. Pricing too low can raise suspicion: ‘What's wrong with this product?’ or ‘Why is this service so cheap?’
The dangers of pricing too low
When you set your price too low, not only do you miss out on margin, but you also exude less value. Customers may doubt your expertise, your reliability or the sustainability of your business. Moreover, you attract especially price-sensitive customers, who will leave for the competition at the slightest price increase.
How do you set the right price?
A good pricing strategy considers three factors:
Cost: What is the minimum you need to charge to be profitable? Don't forget to factor in your own time and expertise.
Value perception: What is your product or service worth in the eyes of your customer? Strong branding and a convincing story can increase the willingness to pay more.
Competition: How do you position yourself in the market? You don't have to be the cheapest, as long as you make it clear why you are worth it.
Prices that increase your sales
Experiment with pricing psychology:
Charm pricing: €99 often sells better than €100.
Bundles: Combine products or services into packages that are more attractive than individual options.
Anchor pricing: Display a more expensive product first so that other prices seem more affordable.
By pricing strategically, you will not only attract the right customers, but also increase your sales and profit margin.
