I've sat in a lot of pricing conversations over the years, across very different businesses, and the same pattern shows up almost every time. Someone calculates what the product costs to build or deliver, adds a margin that feels reasonable, and calls it the price. It's simple, it's defensible in a spreadsheet, and it's almost never the right way to do it.
The problem isn't that cost-plus pricing is wrong. It's that it answers the wrong question. It tells you what you need to charge to stay afloat. It says nothing about what the customer would actually be willing to pay, which is a completely different number, and usually a larger one.
Price is a signal, not just a number
Customers use price to infer quality before they have any other information to go on. A price set too low doesn't just leave money on the table. It can quietly undermine trust in the product itself, especially in enterprise or advisory contexts where buyers are conditioned to associate low price with low seriousness. I've watched founders discount aggressively to win an early customer, only to find that the same customer trusted them less because of it.
This is the part cost-plus pricing completely misses. It treats price as an internal accounting output. In reality, price is one of the most visible strategic choices a company makes, and customers read meaning into it whether you intend them to or not.
The question that actually sets a good price
The better starting question isn't "what does this cost us." It's "what is this worth to the person buying it, and what alternative are they walking away from." A tool that saves a company forty hours a month is worth something very different depending on what an hour of that company's time is worth, and that has nothing to do with what it cost you to build the tool.
This is uncomfortable for a lot of founders, because it requires talking to customers about value in a direct way, rather than hiding behind a spreadsheet. But it's the only approach that scales. Cost-plus pricing caps your upside at your costs. Value-based pricing lets the price grow with the value you create, which is usually a much bigger number than anyone expected when they started.
Where to start
Before your next pricing decision, set the cost sheet aside for a moment and ask a simpler question: if this went away tomorrow, what would it actually cost the customer, in time, money, or risk? Start there, and the number you land on will usually look very different from cost plus a margin. It will also usually be higher.