--- title: "How to Set Price: 10 Steps That Will Reveal the Right Price for Your New Offering" description: "How to Set Price: 10 Steps That Will Reveal the Right Price for Your New Offering" --- [![Peer Insight](https://blog.peerinsight.com/hubfs/PeerInsight_September2019/Images/peerinsight_logo_white.png)](https://peerinsight.com/) - [ABOUT](https://peerinsight.com/about/) - [SERVICES](https://peerinsight.com/services/) - [TOOLKIT](https://peerinsight.com/toolkit/) - [BLOG](https://peerinsight.com/blog/) - [TEAM](https://peerinsight.com/team/) - [CAREERS](https://peerinsight.com/career/) - [CONTACT](https://peerinsight.com/contact/) [![Peer Insight](https://blog.peerinsight.com/hubfs/PeerInsight_September2019/Images/peerinsight_logo_white.png)](https://peerinsight.com/) - [ABOUT](https://peerinsight.com/about/) - [SERVICES](https://peerinsight.com/services/) - [TOOLKIT](https://peerinsight.com/toolkit/) - [BLOG](https://peerinsight.com/blog/) - [TEAM](https://peerinsight.com/team/) - [CAREERS](https://peerinsight.com/career/) - [CONTACT](https://peerinsight.com/contact/) # How to Set Price: 10 Steps That Will Reveal the Right Price for Your New Offering by [Tim Ogilvie](https://blog.peerinsight.com/blog/author/tim-ogilvie) | [business models](https://blog.peerinsight.com/blog/tag/business-models), [DIY Templates & Tools](https://blog.peerinsight.com/blog/tag/diy), [innovation strategy](https://blog.peerinsight.com/blog/tag/innovation-strategy), [lean startup](https://blog.peerinsight.com/blog/tag/lean-startup), [Product and Service Development](https://blog.peerinsight.com/blog/tag/product-and-service-development) As we help firms introduce new, breakthrough services and experiences, there comes a moment that can feel like the first day of school: *Pricing*. No matter how much preparation has come before, the venture team can suddenly feel uncertain, anxious, and wracked with doubt. \*Deep breath.\* Before simply setting a price for a new offering, most venture teams have taken great care to study the user context and to define and validate the surrounding business model. The typical elements include: - User journey/job-to-be-done/pain- point - User perceived value of the offering - Right to play - Supply chain - Demand chain/channel/customer acquisition - Service delivery model - Cost structure - Revenue requirements (we recommend Discovery-Driven Planning for this) - Year 1 go- to -market plan - Revenue model (bundle, **price**, frequency, revenue share) - On-ramp (how we lower the hurdle for tryout) As this list shows, *Price* - that magic element that excites and frightens us - serves as an important cog within a larger machine. You don’t set the price in isolation. You don’t choose price using a mathematical model. And you certainly don’t announce a price and cross your fingers. ![](https://blog.peerinsight.com/hubfs/Imported_Blog_Media/witharrow-1024x768.png) Instead, ventures can view *Price* like other attributes that they design for with input from the market. Here is a step-wise checklist for how successful ventures can *step down* to price, rather than making a risky leap. You can think of each step as **[an assumption that needs to be tested and validated](https://peerinsight.com/blog/moving-from-say-to-do/)** with the market. **Step 1, The venture team believes target users will perceive a problem and will perceive value in our solution.** - We have *observed* the problem directly, and based the design of our solution on empathy with the users **Step 2, Target users do perceive a problem and see value in our solution when we show it to them.** - Users tell us, “I like that.” **Step 3, Target users validate ordinal value.** - Users tell us, “I like that more than X, but less than Y.” **Step 4, Target users indicate cardinal value (they are aware of their current expenditures of money and time regarding this problem).** - Users tell us, “I see it as saving me X time and Y dollars.” **Step 5, Target users are willing to have a relationship with our firm/agent regarding this offering (i.e., right to play).** - Users tell us, “Your firm/agent is a credible provider of a solution.” **Step 6, Target users believe it is equitable to pay, based on precedents/analogies.** - Users tell us, “I would expect to pay for this, similar to how I pay for Z.” **Step 7, Target users have a reference group of expenditures in mind when considering your solution.** - Users tell us, “I spend about X dollars for category Y, and that is way less important to me.” **Step 8, Payment timing makes sense to them.** - Users tell us, “I see, I don’t pay until/unless I use it.” - Users tell us, “I see, since you provide it monthly, I pay a monthly subscription.” **Step 9, Price feels fair compared to (a) existing workarounds and (b) alternative solutions**. -  Users tell us, “That amount sounds worth it, if it works.” **Step 10, Early adopter target users feel their risk is being recognized and offset (i.e., an on-ramp).** - Users tell us, “It makes it easier that you’re willing to bear some of the risk since this is relatively unproven.” The actual *Price* does not come into play until Step 9 of 10. By then, the venture has had ample signals (Steps 1 thru 8) to help bracket the price. Each one occurs within a rich context of the surrounding offering, business model and venture strategy. By following these steps, *Price* feels less like a decision, and more like a natural output of the business design and validation process. That’s when *the Price is Right*. Of course, you’ll still feel those first-day-of-school butterflies. But it’s because you care so much about your venture, not because you aren’t prepared. Don’t worry; the *Price* is right- enough. In almost no time your venture will be post-revenue! Now you can turn your attention to **[getting traction in the market](https://peerinsight.com/services/venture-acceleration/)**. # About Us Peer Insight helps organizations ignite growth by uniting design, business, and entrepreneurship. 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