Setting the right price for your products or services online isn’t just about picking a number out of thin air. It’s one of the most critical decisions you’ll make in your business, and it can mean the difference between struggling to get by or watching your profits soar.

 I know it’s tough. I’ve been there—unsure whether to go high or low, wondering if I’m undervaluing myself or scaring people away with a number that’s too high. But here’s the reality: pricing is not just about numbers. It’s about strategy, psychology, and most importantly, the value you deliver to your customers.
 

When I first started out in the wild west of the internet back in the 90s, pricing was a guessing game. But over time, I’ve learned some key lessons that have helped me and countless others get it right. Let’s dive into what really matters when it comes to pricing your products or services online, and how you can get it right from the start.

1. Price Based on Perceived Value, Not Just Costs or Time.

The first thing you need to wrap your head around is that pricing isn’t about what it costs you to make something or how many hours you put in. It’s about what your product or service is worth in the eyes of your customer. And this is where a lot of people get it wrong. They think, “It costs me X to make, so I’ll charge X plus a little more.” But the truth is, your customers don’t care about your costs. They care about what’s in it for them.
 

Let’s say you offer a service that saves someone hours of work every week. What’s that worth? A lot more than just the time it took you to set it up. It’s about the transformation you’re providing. When you start pricing based on the value your customers get, not just your input costs, you’re positioning yourself to make a real profit. You’re saying, “This is worth it because of the results you’ll get,” not “This is how much it cost me, plus a little extra.”

2. Understand the Dangers of Competing on Price Alone.

There’s a natural temptation, especially online, to think that the only way to win is to be the cheapest. But let me be straight with you: trying to compete on price alone is a race to the bottom, and it’s a race you don’t want to win. If your only selling point is that you’re cheaper than the next guy, then there’s always going to be someone willing to do it for less. And where does that leave you? Struggling, stressed, and undervalued.

Instead, shift your focus to competing on value. What makes your product or service unique? What experience are you providing that others aren’t? When you create a unique selling proposition that focuses on the benefits and experiences you offer, you’re no longer just another option—they need you specifically. 

Remember, people are willing to pay more for something that they perceive as special or exclusive. You’re not just selling a product, you’re selling an outcome, an experience, a solution. Price accordingly.

3. Test, Don’t Guess!

Guesswork in pricing is like shooting arrows in the dark. You might hit the target, but more likely, you’ll miss out on potential profits. The beauty of the internet is that it allows you to test your pricing strategies with real-time data. And yet, so many business owners just pick a number and stick with it, never testing to see if they could be doing better.
 

Start by setting up A/B tests to try different price points. Maybe you offer a premium package and a standard one, or you experiment with limited-time offers to see how price sensitivity changes. Look at your sales volume and customer feedback. You might find that a slight increase in price doesn’t reduce sales at all—in fact, it might even increase them because perceived value goes up. Or you might see that a lower price point brings in way more volume, boosting overall profits. 

The point is, don’t be afraid to experiment. Let your customers tell you what they’re willing to pay, and learn from it.

4. Leverage the Psychology of Pricing. 

Pricing is as much about psychology as it is about math. The way you present your prices can have a huge impact on how they are perceived. Take “charm pricing,” for example—the classic $9.99 instead of $10. This tiny tweak can make a big difference because customers perceive $9.99 as significantly cheaper than $10, even though it’s just a penny less.
 

Another powerful tactic is anchoring. By offering a high-priced option next to your main product, the main product suddenly seems more reasonable. Or consider the use of decoy pricing, where you introduce a third option to make the middle choice appear more attractive. These are small shifts, but they can have a major impact on your sales. Understanding and using these psychological principles can help you position your products or services in a way that feels like a no-brainer for your customers.

5. Know Your Customer Like the Back of Your Hand.

If there’s one thing I’ve learned, it’s that pricing is deeply tied to knowing your audience. Not everyone values the same things. Some people are looking for the lowest price, but others are willing to pay a premium for high quality, exclusive content, or superior service. You need to understand who your ideal customer is and what they value. This isn’t about being the cheapest or the most expensive—it’s about being right for your audience.
 

Do your research. Listen to your customers. What problems are they trying to solve? What are their biggest pain points? The more you understand them, the better you can position your pricing to align with their expectations. When you know what your customers value, you can set your prices to reflect that value and communicate it effectively.

6. Don’t Be Afraid to Raise Your Prices.

Here’s a little secret: sometimes, the best way to grow your business is to raise your prices. I know, it sounds counterintuitive, especially if you’re worried about losing customers. But here’s the thing—when you provide real value, people are willing to pay for it. In fact, sometimes a higher price can actually attract more serious, committed customers. It’s all about positioning.

Think about it: when was the last time you saw someone bragging about getting the cheapest heart surgeon? Higher prices can create a perception of higher quality. If you’ve been delivering consistent value and your customers love what you do, raising your prices can actually be the right move. It signals confidence in your product or service. It says, “I’m worth it, and I know it.”

The Bottom Line…

Pricing your products or services on the internet isn’t just about numbers on a page. It’s about the value you deliver, the perception you create, and the customers you attract. Understand that pricing is fluid—it should evolve as your business grows and as you learn more about your market. Stop competing on price alone, start testing your pricing strategies, use psychology to your advantage, and know your customers inside and out.

Most importantly, don’t sell yourself short. If you’re providing value, don’t be afraid to charge what you’re worth. The internet is a big place, and there’s plenty of room for businesses that know their value and aren’t afraid to claim it. When you get your pricing right, you’re not just making sales—you’re building a brand that stands the test of time. So, get out there, test the waters, and remember: your price tag is just a reflection of the incredible value you bring to the table.