Femi runs an events company in Ibadan. Every time he sets a price, he does the same thing. He calls two friends in the business and asks, “Abeg, what are you charging these days?”
One of them is about to close down. The other hasn’t raised his prices since 2021. Femi doesn’t know either of these things, and he prices accordingly.
“What are your competitors charging?” is the most expensive question in Nigerian business. It sounds like research. In practice, it hands your pricing decision to a company whose costs, margins, funding and plans you know nothing about, and who may well be quietly going under.
Of all the numbers you control, price moves profit the most. A 10% price increase that keeps your customers drops straight to profit. Getting 10% more customers costs money in ads, time and delivery capacity. Yet most businesses spend months on their logo and about twenty minutes on the number that decides whether any of it works.
You’re Selling Certainty
When a Nigerian buyer hesitates over your price, they rarely mean “this costs too much”. They mean “I’m not sure this is worth it, and I can’t afford to be wrong.”
Those objections need different answers. Discounting answers the first one. Only proof answers the second, and the second is the one you’re usually facing.
In a market where a bad purchase is hard to reverse, refunds are awkward and warranties are theoretical, the buyer is pricing in risk as well as cost. A lower price doesn’t reduce that risk, and it often increases it. Cheap signals that something is being skipped, and the buyer’s job is to work out what. Everybody here has bought the cheap generator once.
One test reveals which objection you’re facing. Offer to reduce the scope at the same rate, keeping your price per unit of work the same. If they take the smaller package, it was budget. If they push back and want everything but cheaper, it was doubt all along, and you can’t discount your way out of doubt.
Four Ways to Set a Price, From Worst to Best
1. Cost-Plus
Add up what the work costs you, add a margin, and call that the price. It looks safe, but it prices your inefficiency.
Say a website takes you 40 hours at ₦10,000 an hour, and you add a 25% margin. You charge ₦500,000. A year later you’ve sharpened your process and the same site takes 20 hours. Cost-plus now says charge ₦250,000 for an identical website. You got better and your income halved, while the client got the same result for less. That’s a strange reward for improving.
Cost-plus also ignores the buyer. They care what the result is worth to them, and they neither know your costs nor care about them.
2. Competitor-Matching
Find the market rate and sit near it. It’s safer than cost-plus, but it caps you at your market’s average forever, and it assumes your competitors did the analysis you’re skipping. Often they didn’t. They copied someone, who copied someone else, who once asked Femi.
3. Value-Based
Price against what the outcome is worth to the buyer. A bookkeeping service that recovers ₦400,000 in missed deductions should be measured against that ₦400,000, and other bookkeepers’ hourly rates barely come into it. You have to actually know the outcome you produce, which is why most businesses can’t do it, and why the ones that can pull away from their market.
4. Tiered Value, Best for Most SMEs
Offer three options at clearly different scopes, priced against three clearly different outcomes. It changes the question in the buyer’s head from “yes or no” to “which one”, and it lets the buyer choose their own level instead of forcing you to guess their budget.
Oscar Wilde defined a cynic as someone who knows the price of everything and the value of nothing. Femi’s two friends are a fine source of prices. Neither can tell him what his events are worth to the families who book them.
Why Three Tiers Work
You want most people to choose the middle option, and the other two exist to make that choice easy.
The top tier makes the middle look reasonable. The bottom tier gives price-sensitive buyers somewhere to land other than your competitor. It must be meaningfully smaller without being deliberately crippled. Buyers can smell a fake option, and it costs you trust across all three.
| Tier | Its actual job | Common mistake |
|---|---|---|
| Entry | Catch buyers who’d otherwise leave, and prove you’re real at low risk | Making it so limited it insults the buyer |
| Core | The one most people should buy, with your best margin at your best fit | Not making it obviously the sensible choice |
| Premium | Anchor the range, and serve the minority who want everything | Pricing it so close to Core that it anchors nothing |
The Naira Problem Nobody Wants to Discuss
Pricing in a currency that moves against your input costs is very real here. If any meaningful part of what you sell is priced in dollars, like imported stock, software licences, hosting or ad platforms billing in USD, your margin erodes every time the rate shifts. A price you set in January can be underwater by June without you doing anything wrong.
There are three practical responses, listed from least to most annoying for customers.
Review prices on a stated schedule. Do it quarterly and announce it in advance, so increases feel like policy and nobody can call them opportunism.
Use quote validity windows. “This quote holds for 14 days” is standard practice, and it protects you without drama.
Price FX-exposed items separately. When a component really moves with the dollar, list it on its own line, so the increase is visibly attached to the thing that actually moved.
The Price Increase Conversation, Scripted
Most price increases fail because they’re announced apologetically, which invites negotiation. The version that works states the new price, when it takes effect and what stays the same, and skips the long justification. “From 1 March, the monthly retainer moves to ₦X. Everything in your current scope continues unchanged, and your rate is held until then.” A long justification signals that you’re unsure, and an unsure price is a negotiable one. Nigerian buyers can smell an unsure price from across the market.
Before You Change Anything
- Calculate what your customer actually gains. Work out what changes for them in money, time or risk avoided. If you can’t state it in one sentence with a number in it, you’re not ready to price on value, and closing that gap is the real project.
- Find the customers who don’t haggle. Almost every business has customers who would have paid more, and a group who were always going to grind you down. Look at who never negotiated. That’s your real market.
- Test on new customers first. New enquiries get the new price, and existing customers keep their current rate for a stated period. You learn whether the market accepts it without risking the relationships you already have.
- Watch your close rate and ignore the noise. Complaints go up with any increase and tell you almost nothing. If your close rate holds and your average deal value rose, the increase worked, however much noise it made.
- Give it a full quarter. Pricing changes take a sales cycle to read. Reversing after three weeks because two people grumbled means you paid the whole cost of the change and collected none of the benefit.
Start This Week
Take your best-selling service and write down, in naira, what it’s worth to the customer who buys it. Put that figure next to your current price.
If the gap is wide, build a higher tier around the outcome before you touch the base price. Then pick the date of your next price review and tell your customers it’s coming.
Price From the Wedding
Femi could keep calling his friends. Or he could work out what a smoothly run wedding is worth to the family paying for it, and price from there. I know which one I’d bet on.
Pricing is only one place money leaks. The free diagnostic checks all four walls in two minutes and shows you where to start.
P.S. Businesses spending ₦1M or more a month on marketing can also book a free Leak Check. It’s 30 minutes with no card, and nobody will ask what your competitors charge.
Femi’s story is illustrative. This article is general business information, not financial advice.
This article covers one part of a bigger system. Our guide to digital marketing in Nigeria shows how the four walls fit together, and the order to build them in.
