Getting pricing right is one of the earliest and trickiest decisions a new business makes, and four South African founders who’ve navigated it agree on one thing above all: pricing has to balance profitability with what customers genuinely believe they’re getting in return.
Knowing your real cost drivers
Currency exposure, logistics costs, and the true cost of production and labour all shape a workable price floor differently depending on the business. A recycling or upcycling business needs to price based on labour and material costs even when the raw input is technically waste, while a global-facing tech product has to account for exchange-rate volatility that a purely local competitor doesn’t.
Setting the price itself
Benchmarking against industry leaders, then pricing slightly below or using a consistent margin, is one common approach. Another is asking directly what a customer would be willing to pay elsewhere for the same value, essentially pricing from the customer’s own mental model rather than only from internal cost structure.
Raising prices without losing customers
Bundling a price increase with a genuinely new feature or product range, rather than raising prices on an unchanged offering, gives customers a reason to accept the change. Transparency about why a price is changing, tied to real cost pressures like fuel or input costs, builds the trust that keeps customers from simply switching to a cheaper alternative.
Frequently asked questions
What’s the biggest factor in choosing a pricing model?
Balancing profitability and sustainability with what customers perceive as fair value for the product or service.
How should a small business handle price increases?
By tying increases to new features or genuine cost pressures, and communicating the reason transparently rather than raising prices silently.
Does benchmarking against competitors work as a pricing strategy?
Yes, many businesses price slightly below industry leaders or apply a consistent margin relative to competitor pricing.
Why is pricing especially hard for businesses using recycled or waste materials?
Because the raw input cost is low or free, pricing has to be based on labour and perceived value rather than material cost alone.
Can smaller businesses compete on price with larger e-commerce players?
Rarely on price alone; most compete instead on personalised service, quality and exclusivity where larger competitors can’t match them.
Originally published in September 2016. Updated September 2026.
Consumer protection context via the Department of Trade, Industry and Competition.
Further reading
Originally published in September 2016. Updated September 2026 to add current, structured pricing-model guidance alongside these four founders’ own real-world approaches.
