Money, Pricing & Model

How do I price my product so I'm actually making money and not accidentally selling below cost?

A starting point

Most early founders price off gut or competitor screenshots and never compute their true unit economics, so they scale a loss. Start by knowing your fully loaded cost per unit or per customer (including payment fees, support, and your own time), then price for a margin that survives discounts and refunds. Pricing is a business-model decision, not a spreadsheet afterthought: if you can't explain how each sale makes money, you don't have a business yet, you have a hobby with invoices.

Go deeper

Hand-picked from around the web, each with a note on why it earns your time.

3 resources 2 link-checked Read Use

Read

📖 Book
✓ Link checked Paid Intermediate

Why we picked it When you are the only one selling something like your product, cost-plus and competitor benchmarks give you nothing to anchor on, and this book is the clearest case for the alternative: figure out what customers will actually pay before you finish building, then shape the product around that. Ramanujam ran pricing for hundreds of launches at Simon-Kucher, so the willingness-to-pay conversations he describes are practical, not theoretical. Treat it as a starting point for how to run those conversations, not a formula to copy.

Monetizing Innovation: How Smart Companies Design the Product Around the Price

From Wiley (2016) by Madhavan Ramanujam and Georg Tacke Book, ~240 pages

  • Have the willingness-to-pay conversation with customers early, before the product is done, so price shapes what you build instead of being an afterthought.
  • Different customers value your product differently: segment by willingness to pay rather than forcing one price on everyone.
  • Design the product and its packaging around the price customers will bear, not the other way around.
Open amazon.com →
✍️ Essay
Free Intermediate

Why we picked it Most pricing advice tells you to look at competitors, but this essay from David Sacks (Craft Ventures, ex PayPal COO) makes you look at your own unit math first. It is the clearest founder-level argument that a sale which loses money at the unit level does not get better with scale, so your price has to clear variable cost before anything else. A good starting point for understanding why gross margin and contribution margin, not the sticker price, decide whether you are actually making money.

The Gross Margin Problem: Lessons for Tech-Enabled Startups

From Craft Ventures by David Sacks

  • Growth hides a lot of problems, but bad unit economics is not one of them: if each sale loses money, more sales lose more money.
  • Your price has to clear variable cost first (a positive contribution margin), then cover fixed costs, before profit is even on the table.
  • Copying a competitor's low price to prove product-market fit is a trap when your costs are structurally different from theirs.
Open medium.com →

Use

🛠️ Tool
✓ Link checked Freemium Beginner

Why we picked it Before you argue about pricing, you need one number: what is left from each sale after variable costs. This free calculator does exactly that, computing contribution margin per unit (in their example a 150 dollar coffee maker leaves 72 dollars per sale), and you can copy it into your own Google Sheets to plug in your real costs. A practical way to check you are not accidentally pricing below cost, and to see how much room a discount actually leaves you.

Contribution Margin Calculator (free Google Sheets template)

From Coefficient by Coefficient

  • Contribution margin per unit is just selling price minus variable cost per unit: the money each sale leaves toward fixed costs and profit.
  • Copy it into your own sheet so you can swap in your real material, shipping, and payment-fee costs instead of sample numbers.
  • If contribution margin per unit is zero or negative, you are selling below cost and no volume fixes that.
Open coefficient.io →

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