A price is not measured against what competitors charge or what your materials cost. It is measured against its value in the eyes of the person paying, but you cannot set it without knowing what the whole job costs you, so a price always sits between two walls.
Why checking what others charge is not a method
Ask business owners how they set their price and most give one of three answers. They looked at what competitors charge, they asked for whatever felt possible, or they kept the figure their first customer agreed to and never revisited it.
According to the booklet, that is good company to be in, but it is not a method. And without a method, every conversation about price turns into an argument you enter with nothing solid to stand on.
The trouble is not that the price is too high or too low. The trouble is that you have nothing to measure it against, so you have nothing to say when a customer hesitates.
A price is measured in the buyer's eyes
The source opens with a single rule, and it is not the one most people would guess. Whatever you sell should go for “a price comparable to its value in the eyes of the purchaser.”
The last few words carry the weight. Not the market's view, not your costs, and not what you feel you deserve. The buyer's view.
So two customers can receive identical work, and one of them gets far more out of it. Not because they have more money, but because it solves a bigger problem for them.
Suppose an air-conditioning installer calls every job an install and always charges the same. For a homeowner the unit means comfort. For a restaurant owner it means being able to stay open through the summer.
Now the opposite case. The same installer starts asking each customer what happens if the system breaks down. The restaurant's answer is that they close, and from that moment his price is no longer the same price.
The practical conclusion follows directly. If you have no idea what the customer is after, pricing the work is impossible. You are guessing.
The cost nobody counts
Value in the buyer's eyes is not permission to guess high. The source attaches a condition: you cannot set an amount without some idea of the total cost of what you deliver.
The key word is total. Not what the materials cost, but what everything cost: your hours, the driving, the software, the time spent on the quote, and the fix nobody paid for.
Most self-employed people know what their materials cost and have no idea what their labor costs. So they feel they are making money, and at the end of the year they find out they were not.
Picture a designer who prices by the day and never counts the rounds of revisions every project goes through. On paper the job takes a day. In practice it takes well over two, and she bills for one.
Two walls, and most people only see one
The source frames the range of a price as two dangers, not one. A price set too high drives the public away. A price set too low pushes the business toward insolvency, meaning it can no longer pay what it owes.
That turns pricing from a single point into a range. There is a ceiling, and above it people stop buying. There is a floor, and below it you keep working while the business wears you down.
The catch is that most people only know the ceiling exists, so they press up against it from underneath and are afraid to touch it.
An owner who cuts the price every time a customer hesitates knows only about the ceiling. He has not noticed that he passed the floor long ago, and that every job like that costs him money.
The booklet adds a note on why this is so hard. Most people were never taught where money comes from, so it feels like luck, something that happens to you rather than something you build. A price is exactly where it gets built. In the booklet's words, it is the one decision in a business that changes the outcome without changing anything else, which is a poor thing to leave to luck.
What the booklet adds
This chapter of the booklet includes two exercises: a value exercise and a cost exercise. From there it moves on to what a price has to cover besides cost, what makes something worth money to the person paying, and why actual delivery decides, after the fact, whether the price was right.
A price is not a number you copy from a competitor. It is a decision that starts with what the customer is really buying and ends with an honest count of what it really costs you.
The booklet is general knowledge, not financial advice for your business.