Pricing Strategy

Pricing Strategy Calculator

There are three ways to set a price, and most owners only ever use one. Cost-plus starts at your unit cost and adds a markup. Competitor-anchored starts at the market price and positions above or below it. Value-based starts at what the outcome is worth to the customer and charges a share of it. Cost-plus is the default because it is easy, and it is also the reason so many businesses leave money on the table: it prices your effort, not the customer's result. Seeing all three side by side shows how wide that gap is.

Enter your cost per unit, the value the result delivers to the customer (what it saves or earns them, not what it costs you), and a competitor's price. Then set three sliders: cost-plus markup, value capture rate (the share of delivered value you charge for), and your position above or below the competitor. The calculator produces three prices. The headline is the recommended price, which is the value-based figure whenever it clears your cost, shown with its margin per unit and how far it sits above cost-plus. The two stats show the cost-plus price and the competitor-anchored price, each with its margin. The callout quantifies the gap between your cost-plus floor and your value-based ceiling, which is the money cost-plus pricing hands back to the customer.

The chart is three bars: cost-plus, competitor-anchored, and value-based, each showing price per unit. A good shape rises from left to right, with value-based highest and clear daylight between it and cost-plus. That daylight is your pricing room. A bad shape has the competitor bar towering over your value-based bar, which means the market charges more than the value you are capturing, so either raise the capture rate or make the value more visible. If value-based falls below cost-plus, the value input is understated or the markup is doing work the customer will not pay for.

Predictable Income treats business income as one of three streams, each run as a system, and price is the single input with the largest effect on that system's output. A price change flows straight to margin with no added cost, which is why we push owners to run the math before defaulting to markup. Re-run this before launching any new offer, whenever a competitor changes price, and any time your unit cost moves.