One of the most difficult aspects of starting a business is determining the cost for your product or service. If you charge too much, you might chase customers away before they have an opportunity to use your product or service; if your pricing is too low, customers might assume your product is inferior.

To avoid such an undesirable outcome, establish a baseline for what customers are willing to pay. Do this by conducting surveys and analyzing competitors' rates (for more on conducting surveys, see "Ask Customers What Your Business Needs.")

But be sure you're comparing apples to apples. Determine exactly what your competitor's product or service offers compared with what your business offers. This process will also help you determine how you're going to set yourself apart from your competitors.

Be aware of how much you need to make to keep your business solvent. Create a detailed budget that considers all aspects of the business. Include marketing expenses, office supplies, outsourcing costs, etc. Consider whether you'll be able to cover your expenses and survive at your desired price range.

If not, find ways to cut costs. Should you go overseas for manufacturing? Should you order in larger quantities to get a volume discount? Is your packaging too costly? If you have a service rather than a product, what expenses are driving your costs up, and can you lower those expenses without a negative impact on your business?

Once you set your price, it's always easier to lower it than it is to increase it. But before lowering the price, test that lower price with a sale or discount code. If the sale or discount code doesn't drive any more sales, there may be other factors that account for your failure to bring in business. It could be a lack of marketing, or you may have a product or service that isn't needed.

Finally, use QuickBooks to track your income and expenses so you can analyze which aspects of your business are profitable and which aren't. Focusing on the profitable aspects will help you drive the direction of your business. If needed, you can adjust the prices of products in the unprofitable areas or eliminate that part of the business.

Remember that pricing isn't an exact science and will require changes over time. You'll have to analyze your pricing continually because of variables such as the economy, the seasons and changing trends in the business environment. On the other hand, be careful not to change your pricing too often. Doing so may confuse your customers and be seen as instability in your company.