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Module · AI in Finance

Pricing without guesswork

Your price should make sense to customers and to your company. It needs to cover costs, support profit and fit what customers are willing to pay.

Lesson 1 of 1 · 8 min read

Price is a decision, not a random number

AI can suggest prices, but your team needs to explain the reasoning.  

You should consider:  

  • Unit cost: How much does one product or service cost to make or deliver? 

  • Competitors: What do similar products, services or alternatives cost? 

  • Customer value: Why would customers choose your offer at this price? 

  • Profit margin: How much money is left after the unit cost is taken away from the sale price? 

If one item costs £4 to make and you sell it for £6, you will make an extra £2 per item.  

However, in order to make a profit, you will need enough customers to buy the product or service at the price you’ve set. If you’ve produced 50 products but only sell 5 because customers think they’re too expensive, you could make a loss. In this case, you might make more profit overall by selling each item at £5 instead of £6.  

Your sales price should always be more than the unit cost.  

Pricing scenarios to test with AI:  

  • “We are deciding the price for our Young Enterprise product. Our estimated unit cost is £__. We are considering selling it for £__. What three questions should we ask customers before deciding the final price?” 

  • If our product/service costs £_ to create, and we are selling it for £_, how much profit will we make if we sell 30, 60 or 100 items? 

  • If our unit cost increases from £_ to £_, how will this affect our profit if we keep the customer price the same at £_? 

AI can help to test these scenarios, but you must always check the figures it gives you.