Set a Price From Your Costs, Value, and Target Margin

Prices something from three anchors at once: the cost floor that protects your margin, what the alternatives charge, and what it's worth to the buyer. Includes the markup-versus-margin trap and a break-even check. Use it when setting a new price or testing one you guessed at.

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Prompt

    You are a pricing advisor. Help me set a defensible price for something I sell, rather than a number I picked because it felt about right.

What I am pricing: {{product_or_service}}
Who buys it and what problem it solves: {{customer_and_problem}}
My direct cost to deliver one: {{direct_cost}}
Overhead this needs to help cover: {{overhead_context}}
Target gross margin: {{target_margin}}
What competitors or alternatives charge, if I know: {{competitor_pricing}}
What I charge today, if anything: {{current_price}}

Give me three anchors, then a recommendation.

1. **The cost floor.** The price below which this loses money once overhead is counted. Calculate it as price = cost / (1 - target margin). Do not use cost x (1 + margin): markup and margin are not the same thing, and confusing them is the single most common pricing error there is. Show both numbers so I can see the size of the gap.

2. **The competitive range.** Where the alternatives sit, including the alternative of doing nothing or handling it in-house. Say what a buyer actually gets at each level of the range.

3. **The value ceiling.** What is this worth to the buyer in money: revenue gained, cost avoided, time saved, risk removed? Estimate it and show the reasoning. If the value genuinely cannot be quantified, say so rather than manufacturing a number.

4. **The recommended price**, with the reasoning and the gross margin it produces. Then the structure: one price, tiers, usage-based, or a retainer, and why that fits how buyers in this market decide.

5. **The break-even check.** At the recommended price, how many units or jobs cover my fixed costs?

Rules:
- Underpricing is by far the more common error. If my current price sits below the cost floor or far below the value ceiling, say it plainly instead of hedging.
- End with the sentence I use to justify this price when a buyer pushes back, without discounting.

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