Everywhere I look I see millions of Rands being dumped in the drain by well-meaning, over-worked and under-earning entrepreneurs. Many entrepreneurs are victims of copying the mistakes made by the pioneers of their industries. They never question things. One of the most contentious areas that cause a lot of resistance, internal conflict and anxiety among entrepreneurs is PRICING.

Pricing is misunderstood!

Some business owners try to align the prices of their goods and services with those of their competitors. Others believe that price should be a mark-up on cost. Of course, this model is even taught at school but it is not entirely correct. There’s no scientific relationship between price and cost. Price is a discount on value. Price is more a relative of value than it is of cost. Your clients do not care about your cost; they care about the value they get for the money they pay you.

You can’t base your price on your competitors. Price is a subject of value; it’s not a weapon to fight your competitors. Value can only be defined by a customer – not your competitors.

Your customer knows that:

  1. The value of your service or product is directly related to the pain she would experience if she did not have the benefit or outcome brought by your service or product. (Please read that again and really think about it)
  1. Once value is established, price, however high it may seem, is always a discount of value.
  1. Everything of great value must command a premium price.

The natural law of compensation states that your compensation is tied directly to the value you provide. This may come as news to some people: your clients do not care how hard and how long you work or how many weekends with family you miss – all they care about are the results you produce (value).

How long and how hard would you want your dentist to work when doing your root canal or extraction? Would you want him to work harder and longer so you can justify paying him more money for his dedication and his time? I bet not. I’m sure you just want the result – preferably very fast and as painlessly as possible (value). If you are not the only player, the biggest, or one of the biggest players or a household name like Pick n Pay or Makro – you must charge premium prices.

This article is an excerpt from a special Business Report titled The Truth About Clients With Money To Spend. You can download the full Business Report for free from



Siya Mapoko is an independent marketing specialist, founder of MRI, author and professional business speaker. He has over 12 years experience in scientific business research fields Chemistry, Drug research, Investment analysis, Equity trading and Entrepreneurship. Siya is a regular contributor of Kasibiz Mahala.


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