You have built something with no comparable. No competitor price list to read, no analyst category, no line in anyone's budget with your name on it. So you do the one thing the spreadsheet allows: add up what it costs to deliver, add a margin you can live with, and pick a number that feels brave. It is nearly always too low, and not for want of nerve: you priced against your own costs instead of what the problem is already costing the buyer.
A first price is not arithmetic. It is the first real statement you make about how much the problem matters.
The number you can defend is not the number you want
Cost-plus is the number you can defend in a board meeting, which is why it is hard to give up: you can show the working. But your costs are the one input your buyer has no interest in. They are weighing your price against the cost of carrying on as they are, and that is a figure you have probably never put in front of them.
Cost-plus also caps you at the margin you imagined before anyone had used the thing. I have sat with founders eighteen months after launch working out that customers would have paid three times the list price, which had by then become the hardest thing in the company to change.
Pricing usually arrives too late to be a decision
Simon-Kucher's Global Pricing Study 2014 surveyed about 1,600 directors and managers across more than 40 countries in May and June 2014. Seventy-two percent reported that new products miss their profit targets. One in four said not a single new product had met the target it launched against.
The study's own explanation is timing: most companies deal with pricing when it is already too late, often right before launch. By then it can only be a calculation, too late to change what gets built, who it is built for, or what it is called, and all three are pricing decisions.
Price against the problem, not the product
Find the number your buyer is already losing. Not a market size and not a benefit, but a figure sitting in their accounts this year that they recognise as theirs and that your product changes.
It is usually one of four: hours spent on work nobody wants to do, rework from something going wrong twice, revenue lost to deals that stall for a reason you remove, or a cost they pay someone else to carry. Pick the one your buyer can quantify without help. The one you have to explain to them is not yet evidence.
Your price is then a share of a number they recognise, and the conversation moves off what you cost and onto what they recover.
What do you ask a buyer when there is no price to compare?
Ask them directly. There is a fifty-year-old technique built for exactly this. In 1976 the Dutch researcher Peter van Westendorp presented the Price Sensitivity Meter to the ESOMAR congress in Venice. It puts four questions to one buyer about one product: at what price is it so expensive you would not consider it, at what price so cheap you would doubt the quality, at what price does it start to feel expensive but still worth thinking about, and at what price would it be a bargain.
Put that to eight or ten buyers like your target and the answers draw a band, not a point. Where the "too cheap" and "too expensive" curves cross, van Westendorp called the optimal price point, though the useful output is the range either side of it.
It is a blunt instrument, and worth using. People predict their own behaviour badly but describe the edges well, which is all these questions ask. Rule out what is plainly wrong, then let the value calculation pick inside what is left.
Set a price you can move off
Publish a real list price and discount from it on purpose. Early customers can have a lower number in exchange for something you need and cannot buy: a reference call, a named case study, the right to use their logo. Put the discount and the date it ends in the contract.
The damage comes from the open-ended introductory price. One with no sunset is simply your price, and the first renewal is where you find out.
In a small market the first price travels
In New Zealand, whatever you charge your first customer is roughly public. Buyers in the same sector know each other, sit on the same panels and compare notes. The number you improvise to win customer one is the number customer four opens with.
So set the list price deliberately and keep the discount one you can explain out loud. Here, your pricing is a reputation before it is a transaction.
Before you set the number: what is this problem costing your buyer today, and do you know it well enough to say it back to them in their own words?
Is your pricing built on what the problem costs your buyer?
In about 6 minutes, the free Growth Scorecard shows where your sales are leaking and what to fix first.
Get your free scorecardSources. New-product profit-target failure and the timing explanation: Simon-Kucher & Partners, "Global Pricing Study 2014," conducted with the Professional Pricing Society, reporting a survey of approximately 1,600 directors and managers (39 percent C-level) across more than 40 countries, fielded May and June 2014, in which 72 percent reported that new products miss their profit targets, one in four reported that not one of their new products met its profit target, and the study attributes this to companies dealing with pricing "when it's already too late - often right before the launch." That study is twelve years old and global rather than New Zealand-specific, and it reports what executives say about their own launches rather than audited outcomes, so treat 72 percent as the direction of the problem rather than a current measurement of it. The four-question technique: P. H. van Westendorp, "NSS Price Sensitivity Meter (PSM) - A New Approach to Study Consumer-Perception of Prices," Proceedings of the 29th ESOMAR Congress, Venice, 5-9 September 1976, pages 139-167, which is also the origin of the optimal price point. One figure was considered and cut. Simon-Kucher's Global Pricing Study 2025 (more than 2,200 business leaders, 28 countries, 39 industries, fielded early 2025) reports that companies realise less than half of their intended price increases on average, which is well sourced and recent but describes moving an existing price rather than setting a first one, so it belongs to a different article. The four candidate value metrics, the advice on discounting against a reference rather than against nothing, and the observations about how far a price travels in New Zealand come from my own work with New Zealand tech founders rather than from published data.