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Goldilocks Pricing

Having trouble setting your prices? Business owners often get frustrated or overwhelmed when trying to set prices for their products or services… but it doesn’t have to be complicated! In this article, you’ll learn simple, effective strategies and techniques for determining the pricing of your products/services and pitching your prices to your customers.

Understanding Goldilocks Pricing…

When you price your products/services too low, you have no margin. You don’t want your costs to exceed your price because you won’t make a profit.

When you price your products/services too high, you end up with no volume or demand. No one will buy from you if your prices are unrealistically high because the price exceeds the perceived value.


Business is all about finding a balance between a price that’s too low and a price that’s too high, hence the concept of “Goldilocks pricing”. There are an infinite amount of choices and you want to find a price that’s just right.

Right for you and right for your customers.

We all have unique goals, ambitions, and expectations for our business and our price points will reflect these.

Understanding Your Customer

First, you need to understand what you are selling and to whom. Understanding your target market and their willingness to spend will help you determine your pricing.

What is the value to them of a ‘good result’?

Are they price-sensitive? – (People with a budget are quality focused!)

If they want the best price, what can they give you in return? – (For example: A commitment, like a 3-year service contract or a subscription.)

Think about the ‘Life-Time-Value’ (LTV) – What can you do to make your customers more sticky, so that you can keep nurturing your customer relationship?


Who is your ideal customer? Get specific! This will require research.

Where you pitch depends upon your strategy

3 Strategies for Setting Your Price:

1. Cost-based pricing
  • Start with the cost of goods sold, then factor in what profit margin you want to make. If you want to make a profit of £10 from a product that costs £3 to produce, your price will be £13.

Drive efficiency and engineer value

2. Competition-based pricing
  • This is where research plays a key role. Benchmark against your competition to see what others are charging. If competitors are charging between £20-£25 for a similar product or service, consider setting your price in that range.

Differentiate your offer from competitors.

3. Value-based pricing
  • Think about what your product or service is worth to your customer. If it’s highly valued, like the best cake in town, you could probably charge more.

Get inside your customer’s head and understand their decision-making process and what they value most.

Be confident and present your prices properly

The effect of anchoring:

A valuable technique for pitching your prices is anchoring. Since humans focus on what we see or hear first, anchoring involves pitching a big number first.

Think of a craft beer menu. If your highest priced beers are listed at the top, where people look first, you’re more likely to make a larger profit than if the lowest priced beers were listed first.

In fact, when we ran this a few years ago, on average, customers spent 15% more on beer when the highest priced beers are listed at the top.

Likewise, you can use this technique to anchor a high-priced item to a statistic. For example, “100 5-star ratings!” or “1,000 copies sold!”



What can you do to anchor your prices, so that you can promote your higher priced products and services?


You don’t have to overthink your pricing. Being an entrepreneur is all about experimenting and learning by doing. Try one strategy and if it doesn’t prove to be successful, try a different one! Understanding the Goldilocks pricing concept, who your ideal customer is, and the three different pricing strategies will help you determine an effective pricing model for your business. Good luck!

Has this article got you thinking about your business and how you want to grab the reins and drive it forward but you struggle to find the time or feel that you lack the skills or knowledge to do so?

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