How to set prices that are right for your business and customers

Pricing was very much front of mind at our Godalming office’s November Business Club session. With operating costs rising, customers becoming more cautious and margins under pressure, many businesses are feeling the pressure when setting their prices.

Price is one of the most important decisions a business makes. It influences turnover, profitability, confidence when selling and, ultimately, the ability to grow. Yet for many businesses, it remains one of the hardest decisions to make.

People worry about pitching too high and losing work, or pitching too low and undervaluing themselves. Many spend a long time deliberating – for example, tweaking numbers without stepping back to look strategically at the bigger picture.

To make the topic more manageable, Club members explored a simple four-part framework: consider, strategise, communicate and protect. Each phase sparked a rich discussion, and together they created a practical roadmap for pricing with greater confidence.

Four steps to build a pricing strategy that drives growth

1. Consider: gathering the right ingredients

The conversation began with the foundations – what businesses need to understand before setting a price. Much of the discussion focused on value.

People agreed that understanding what the customer truly wanted was essential. For example:

• Were they seeking a basic service or something more premium?
• What problem were they trying to solve?
• Which outcome mattered most, for example time saved, less hassle, lower risk or greater peace of mind?

Club members also noted the significance of understanding the true costs that determine the business’s profitability. This extends beyond materials, subcontractors, software licences and includes hidden elements such as admin time, travel, marketing activity and the organisation’s labour costs (including holidays, pensions, NI and overhead recovery). Businesses often overlook these and under price unnecessarily.

A final valuable factor was understanding your market, such as how your price compares to competitors’. Capacity pressures should also influence pricing: if a business is nearing full capacity, pricing needs to reflect the opportunity cost of taking on new work.

2. Strategise: choosing the right pricing model

The discussion then examined how businesses can choose a pricing model that suits their customers, operations, and long-term goals. Several common approaches were mentioned — from value-based pricing and retainers to tiered packages and fixed-fee projects.

Participants noted that choosing the best model depends heavily on the type of work being done. Regular support and tasks tend to suit retainers or subscriptions, while one-off bespoke projects are often better suited to fixed-fee or value-based pricing. When the outcome is more important than the hours spent, value-based pricing can be effective.

Another helpful point was the importance of aligning pricing strategy with business operations. If capacity is limited or demand peaks at certain times, applying dynamic pricing or charging premium fees for a faster turnaround can help manage workload while protecting profitability.

3. Communicate: expressing price with clarity and confidence

The next focus was on what many consider the most challenging aspect: confidently communicating prices. When businesses conceal their prices for too long, it often breeds mistrust. Customers rarely like surprises when it comes to price (unless the price comes in less than they thought).

Club members agreed that being transparent and having simple pricing throughout the customer journey helps customers feel more comfortable and reduces resistance. Having a close control of the scope of the work against the price originally quoted is also important. This enables any deviations to be quickly raised with the customer.

Practical ideas, such as using visuals or simple tables to explain pricing and value, were shared. Some members found that short case studies were particularly effective in demonstrating the value behind the price by highlighting the results achieved or the risks reduced.

Consistency was seen as essential too. Pricing messages should remain the same from marketing materials and initial conversations right through to proposals and onboarding. Customers feel more confident when they hear a unified explanation from everyone in the business.

Another strong theme was offering options rather than a single yes/no price. Giving three choices (for example, “essentials,” “standard” and “premium”) shifted the conversation from “Can we afford this?” to “Which option suits us best?”.

4. Protect: standing by your price while keeping relationships strong

The final part of the discussion centred on protecting your price once it has been set.

The business challenge of discounting was a major focus. Most agreed it should be used sparingly and only for clear commercial reasons such as long-term loyalty, large volumes or early payment. Ad-hoc discounting often backfired (especially in local markets where customers might compare notes).

A practical suggestion was adjusting the scope rather than the price if a customer challenges the fee. For example: “To meet that figure, we can remove X or reduce Y”. This approach helps businesses maintain value without undermining profitability.

Participants also commented on how regular price reviews (ideally annually or bi-annually) as part of the business “rhythm”. This prevents outdated pricing from lingering long after costs have risen and keeps pricing aligned with current market conditions.

A final point (and one that is difficult but can be most effective in the long run) is knowing when to walk away. Not every customer is the right one, and sometimes turning down unprofitable work frees up time to better serve suitable customers.

Final reflections on pricing

This session emphasised that pricing isn’t just about covering costs – it’s also about demonstrating value, building confidence and supporting growth. Take time to:

• consider the foundations;
• choose a sustainable strategy;
• communicate transparently;
• stand by decisions.

By doing the above, businesses can price in a way that benefits both them and their customers.

Thank you to everyone who contributed such open and practical insights. If you’re interested in joining us for future Business Club events, please visit our Godalming office page for more information.