Pricing With Confidence

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May 13
3 min read

How to Set Your Rates Without Second-Guessing Yourself

Why do new entrepreneurs undervalue their services?

Many entrepreneurs, especially those in freelance and service-based industries, fall into the trap of underpricing. This often stems from fear—fear of losing potential clients or appearing too expensive—paired with a lack of confidence in the value they provide.

But the consequences are real. Underpricing leads to burnout, low profit margins, and a perception of inferior quality. According to the Harvard Business Review, one of the most overlooked tools for smarter pricing is understanding the economic value to the customer (EVC). This means thinking beyond the cost of service and instead asking: What outcome does this deliver for the client?

📊 A FreshBooks study found that 57% of freelancers underprice their services in the first year.

What is value-based pricing and why does it matter?

Value-based pricing is a method that sets your rate based on the perceived or measurable value delivered to the customer, not just your costs or what competitors charge.

Say you're a consultant who helps a business generate an additional $100,000 in annual revenue. Even if your fee is $10,000, that’s just 10% of the total value delivered—a compelling deal.

This is very different from cost-plus pricing, which simply adds a markup to the base cost, or competitive pricing which pegs your rate to what others charge. While those models might keep you “in the market,” they rarely reflect the true value of your work.

How can you communicate your value effectively?

The phrase "I do social media marketing" won’t cut it. But saying, “I help e-commerce brands drive 30% more revenue via performance-focused content” makes the value clear.

Communicating your value is about outcomes. Think results, efficiency, time saved, or stress avoided. This is where tools like the Economic Value to the Customer (EVC) model can help frame your worth in ways clients understand.

Other ways to convey value:

Use real testimonials and case studies
Provide data-driven outcomes
Highlight unique differentiators in your offering

💬 As pricing expert Hermann Simon said in his book Confessions of the Pricing Man, “Customers will pay more if they perceive more value—perception is reality.”

What pricing strategies are commonly used and how do they compare?

Here’s a breakdown of the most common models:

Pricing Model	Description	Pros	Cons
Cost-Plus Pricing	Add markup to your base costs	Simple to calculate	Ignores market value and customer perception
Competitive Pricing	Set price in line with competitors	Helps stay in market range	Can lead to undercutting and price wars
Value-Based Pricing	Base price on the value you create for the client	Reflects true worth; high ROI for client	Requires deeper client understanding

How do you build confidence in your pricing?

If you find yourself justifying your rates too often, it's time to work on pricing confidence. Here are four steps:

Know your outcomes – Quantify the value you create with each project. Use frameworks like HubSpot’s pricing strategy guide to outline ROI.
Role-play pricing conversations – Practice with a mentor or peer. Get used to saying your number without flinching.
Add price context – Anchor your pricing by comparing it to the cost of inaction or alternatives. For instance, “Hiring me for $5,000 is far less costly than spending $15,000 on ads that don’t convert.”
Use anchoring techniques – Present multiple pricing tiers so clients can choose based on perceived value. Neil Patel breaks this down with real examples in his pricing strategies breakdown.