Business By Hormozi #230: Mastering the Pricing Mindset as an Entrepreneur

Entrepreneurs often find themselves in an exhausting mental loop when it comes to pricing. If they don’t close every deal, they feel like they are failing—believing they need to improve their offer, their pitch, or their overall skills. But paradoxically, when they do close every deal, they start to wonder if they underpriced their product or service, leading to frustration over lost potential revenue. This constant battle with the pricing mindset creates an ongoing sense of self-doubt that can be difficult to escape.

The reality is that pricing is more psychological than mathematical. Most people assume there’s a "perfect price" that ensures consistent sales while maximizing revenue, but the truth is, pricing is a balancing act between value and perception. If something is too cheap, customers may not value it enough. If it’s too expensive, they may hesitate or look elsewhere. The challenge for entrepreneurs is understanding when hesitation is good and when it signals an issue.

How the Wrong Pricing Mindset Holds You Back

Let’s break down the two most common pricing mindset traps entrepreneurs fall into:

1. If you're not closing 100%, you feel like a failure.You might think: "I need to improve. My sales skills aren't good enough. Maybe I should lower my price." The problem with this mindset is that it assumes rejection is bad. But rejection isn’t always negative—it often means you’re pricing at a point where only the right customers are saying yes. If everyone says yes instantly, your price is likely too low.

2. If you're closing 100%, you assume you’re undercharging.You might think: "I should have charged more. I left money on the table." While it’s true that a 100% close rate often signals undervaluation, it doesn’t necessarily mean you need to raise your price immediately. Instead, look at your customers—are they your ideal audience? Are they paying with hesitation, or are they thrilled because they got a steal? Your answer determines whether an increase is necessary.

The pricing mindset struggle stems from a fear of making the wrong decision. But the real mistake is letting self-doubt stop you from testing and optimizing.

How to Fix Your Pricing Mindset and Charge What You’re Worth

The most successful entrepreneurs understand that pricing is an experiment, not a fixed formula. Instead of seeking a single "perfect" number, they continuously test and adjust based on results. Here’s how to shift your pricing mindset effectively:

1. Accept that rejection is necessary.If everyone buys without hesitation, you’re likely too cheap. A good pricing model creates a natural filter—your ideal customers will still purchase, while others may hesitate. That’s normal.

2. Find the “resistance point” in pricing.The best price is where people pause to think but ultimately buy. If no one hesitates, you’re priced too low. If everyone hesitates but buys anyway, you’re in the sweet spot. If too many people hesitate and don’t buy, you may need to adjust your pricing or communicate value better.

3. Don’t be afraid to increase prices.Entrepreneurs often fear raising their prices, thinking they’ll lose customers. But in reality, a higher price often attracts higher-quality customers who value your offer more. Start small, test the impact, and iterate.

4. Detach your self-worth from pricing.The biggest pricing mistake entrepreneurs make is tying their self-worth to their sales success. Pricing is a business decision, not a personal reflection of your abilities. If you’re charging based on fear rather than strategy, you’ll always feel like you’re not enough.

   
   

Conclusion: The Right Pricing Mindset Wins in the Long Run

The most successful businesses don’t stress over closing every deal. They optimize for profitability, not just sales. Instead of aiming for perfection, focus on iteration. Test, adjust, and pay attention to the patterns—because your pricing mindset will ultimately determine your growth.

When you find yourself doubting whether your price is too high or too low, remember: The goal is not to be the cheapest or the most expensive. The goal is to charge what you're worth—and find the right customers who see the value in that.