pricing for micro businesses

what is pricing?

Pricing is a core element of the marketing mix along with product, place and promotion. The prices chosen by a business are set because of a number of different factors, many of them being complex when looking to price strategically.

where to start with pricing?

There are many pricing strategies to choose from and much will depend on your business and your customers. Understanding your customers is the first part in being able to maximise your profit by pricing according to their perceptions, expectations, levels of demand (need) and also current available alternatives (substitute products/services and competitors).

what pricing can I apply to my business?

When looking to choose a pricing strategy, it’s helpful to consider what is the goal of your business and the marketing objectives. This helps align your business strategy with maximising profit.

Here is a selection of pricing strategies you can choose to apply to your business:

Cost Plus Pricing

This is where a business prices according to the cost of production plus an extra margin, your profit. This method is very popular and for the people purchasing, it’s easy to understand and digest.


  • Easy to predict gross profit and margin from each sale
  • You will never sell at a loss


  • Does not communicate the brand value to the customer
  • Does not take into account competitors pricing and current demand for product/service

Loss Leader

Also known as market penetration, the aim is to maximise the number of sales, even if this means selling at a loss. This type of pricing strategy can be used if you’re looking to gain brand recognition in a short amount of time and prevent new competitors into entering your market.


  • Takes into account competitors prices and substitute products/services
  • Potential to achieve economies of scale through high volume of sales


  • Does not represent your brand for having quality
  • Product or service may be perceived as cheap

Maximise Profit

As some would say the sole purpose of business is to maximise profit and value for the business owners, this pricing strategy seems like the most logical choice. However, to be able to price for maximise profit, businesses will have to be established in a market, have a strong brand and understand the current levels of demand for products/services.


  • Increases profit and value of the business


  • Marketing cost and investment into reinforcing the brand value and positioning in order to demonstrate reason for maximum pricing

Premium Pricing

Adding a premium in your pricing can help to communicate the quality of your product or service and positioning your brand to have value in the customer's eyes. This pricing strategy can be great for established brands launching new products.


  • Takes advantage of current brand and helps to continue brand building
  • High profit margins


  • Successful premium pricing will attract new entrants into the market
  • Continual investment in brand building will be needed to stay competitive

Value Based Pricing

The holy grail for service businesses. This is where price is determined by the customers perception of value from a product/service. This is difficult to quantify but is great to implement as your production costs play no role in setting a value based price and you can start to price according to the value you bring rather than the time it takes deliver your product/service.


  • High profit margins
  • High levels of customer satisfaction and loyalty


  • Significant investment needed in understanding your customer's business model
  • Calculating value based pricing will be different for different customer segments

Dynamic Pricing

This is a great way to maximise your profit without having to change your product or service. Dynamic pricing can occur when you deal with peaks in demand and market trends such as seasonality. This pricing strategy is determined by the levels of need for your product or service, the more they need, the higher the price.


  • Increase profits by optimising prices when your customers are in need the most
  • Appeal to those who are happy to pay premium prices for convenience and personalisation


  • Brand can be damaged when customer's realise they paid more for the same product/service
  • Have to be able to understand your customers and forecast trends to pick effective dynamic prices

what do I need to consider when pricing?

Choosing a pricing strategy is only half the battle when it comes to implementation. You will also have to use a pricing model based on your business model and operations, customers, market size, share and competitors to name a few.

Executing your products and services at the right pricing can be complex because of the internal and external factors it depends upon. There are several risk you should consider:

  1. Choosing an inappropriate pricing strategy can do more harm than good as it can send mixed messages to your customers
  2. Failure to anticipate adjusts in price and demand can be costly as competitors can look to take advantage
  3. Failure to manage and control discounting and sale pricing can lead to your brand being undervalued

how can I find the optimal price for my business?

Business to business (B2B) and Business to consumer (B2C) differ with their pricing and finding the optimal price will depend on who you’re selling to. A lot of finding the optimal price can be through trial and error and seeing first hand what works and what doesn't.

how does pricing effect my business?

Pricing can determine the growth and success of your business. It’s important to look at pricing as an opportunity your business can take advantage of. By optimising your price, you can distance yourself from your competitors and create value propositions that exceed your customers expectations.

where can I find out more about pricing?

Pricing is a widely covered topic and there are many fantastic resources online to help you understand pricing strategies and apply a pricing model to your business.

Even before entering into the world of pricing strategy, there are two must haves that you’ll need to know, the first if about your competitive advantages and the second is your customers.

We can help you identify your competitive advantages and gain a deeper understanding of your customers through one of our PICE workshops.

This co-creation strategy workshop allows you to understand why your brand is better positioned to serve your customers better than anyone else and provides a foundation for you to make strategic decisions, such as pricing, for the future.