How to Price a New Product Launch (Without Guessing)

Many founders price a new product by looking at competitors and picking a similar number. It’s a useful check, but a risky starting point. Start from your own costs and target margin instead.

Three pricing approaches

1. Cost-plus: Add a markup to product cost. Simple, but ignores other costs and customer value.
2. Competitor-based: Match the market. Useful context, but your costs may be different.
3. Value-based: Price on what customers will pay. Powerful, but needs testing.

The best approach combines all three, starting with a price that protects your margin.

Work backwards from your target margin

Numbers in this example are illustrative.

You want a 50% contribution margin on your website.

• Product cost: ₹220
• Shipping and packaging: ₹80
• Payment fees and returns: about 7% of price

Set up the equation, where P is the price:

P – ₹220 – ₹80 – 7% of P = 50% of P
0.43P = ₹300
P = about ₹698, so ₹699

Check: ₹699 – ₹220 – ₹80 – ₹49 (7%) = ₹350, which is about 50%.

Check every channel

If the same product sells on marketplaces or quick commerce at the same price, platform fees will cut your margin. Calculate what you keep on each channel before finalising the price.

Plan your launch offers in advance

If you want a launch discount, build it into your pricing from the start. A 20% launch offer on a ₹699 product at a 50% margin requires 67% more sales to earn the same contribution. See our post on discounts and margins for the full maths.

Common pricing mistakes

• Underpricing to win customers. It’s much harder to raise prices later than to launch higher.
• Forgetting channel fees.
• Ignoring pack sizes and bundles, which can protect margin.
• Never testing. Small price tests can reveal what customers will pay.

FAQs

Should I launch below competitors?

Only if your costs allow it and your brand positioning supports it. Competing on price alone is hard to sustain.

Why ₹699 instead of ₹700?

Prices just below a round number are widely used because they can feel noticeably lower to shoppers. Test what works for your audience.

How often should I review pricing?

At least when costs, platform fees, or competitive conditions change significantly.