I was at dinner with a friend the other night and we started talking about her new business. She was asking a lot of questions about marketing when the topic of pricing came up.  She has a very premium product and is trying to find the best way to price it out.

I’ve always said that pricing is part are and part science, because you need to do research to see what people are willing to pay for your product/service and then place your stake in the ground and decide on what it is. Over time you’ll be able to adjust the price as you collect more data, but until that point, it’s based on your decision.

Pricing can be scary. If you price it too high, you’ll lose opportunities. If you price it too low, you could strain your operations by increasing work load without enough margin to cover the cost.

One way to price your product is with the tried and true “three option comparison”. You have three versions of your product (low feature set, medium feature set, high feature set) and each version has an increasing price point. If you’ve ever signed up for a web-based subscription you’ll know what I’m talking about. More often than not, people will select the middle option — looking for the best value.

But this may not always work for you. If not, there are other options to consider. Check out this great post by Kissmetrics called “5 Psychological Studies on Pricing you absolutely MUST read.” I love their examples, tips and tricks. It really makes me wonder about my own pricing strategies and if I need to reevaluate them.