To find the optimal price point for your services and products, you need to know a lot more than how much it costs you and what your competitors charge, the Entrepreneur.com article “10 Questions to Ask When Pricing Your Product” explains. Ask yourself these questions to decide if your pricing could use some work:

What is the customer willing to pay for my product? Many businesses make the mistake of basing their pricing directly off their cost for providing that service or product (i.e. “It costs us a dollar, so we should charge two.”). Instead, start by deciding how much customers are willing to pay.

What kind of customer do I want to target? The answer to the first question depends largely on this one. Do you want to cater to more clients at a lower margin, or make more money per client but limit the size of your market? Ideally, you’ll be able to identify different price points, segment the market, and maintain both types of customers.

How should I react to my competitor’s prices? Your prices shouldn’t revolve around your competition’s, but it’s certainly a consideration. First, honestly identify if your overall experience is better or worse than the competition. If it’s better, decide how much and price upward. If it’s worse, price downward. And whenever the competition adjusts prices, think about how it affects you and decide if you need to react or stay put.

Can I offer different levels of products or services at different price points? It’s always best to offer options. With different price points, you can still bring in the cheap crowd, but not miss out on the big dollars from those willing to pay for the best of the best.

How can I adjust my prices? Different customers are willing to pay different amounts for the same services, and even the same customer’s willingness will vary based on the purchasing occasion (in-season, off-season, etc.). Pay close attention to customer buying habits to determine when, and for whom, to adjust prices.

Have I given the customer a reason to pay more for my product? If you want to charge more for a product or service, it’s your job to make sure the customer understands and values the difference between the lower priced option and yours. The difference may be based on pure value, or something more intangible like the environment and overall experience you offer. Just make sure it’s obvious to the customer.

Can I base my price partly on intangible benefits? As mentioned above, sometimes your differentiation can come from intangibles like great service, environment, and overall customer experience. These elements are often more apparent to customers than having the best equipment or products.

Should I bundle my products for a single price? Bundling products and services together for one price can be good for both buyer and seller: The customer saves a little money on each product, and you’re able to make a larger sale.

Should I discount to get people to buy my product? Promotions can be good, but don’t overdo it. If you have to regularly discount products and services, there’s probably a larger problem that you need to address. And once customers get used to a discount, they won’t be happy about paying full price again.

How does the customer want to buy my product or service? Make sure you have strong options for customers that want to pay for individual visits, as well as those that want membership. Both types of customers are valuable in their own ways. But, assuming you’d prefer to sell memberships, you’ll have to make that offer attractive enough to secure commitment.

Click here to read the article from Entrepreneur.com.