I’m self-employed. As a full-time consultant, I have to price access to myself, which sometimes feels crazy, but is in fact totally reasonable: Employers pay employees for their time, in exchange for their work product. In my case, I turn my consulting clients into mini-employers who pay me for mine; it makes sense.

Figuring out how to price your product — whether it’s a subscription service, a tangible item, ads, consulting time, or anything else — isn’t easy. A lot of pricing, as both the buyer and the seller, is based on gut. We know when things feel pricey, or when they feel cheap. Neither’s good.

It’s painfully common for people to price themselves too low. A realtor who wants a house to move might recommend pricing under market. A panicking CEO who wants more ads sold on his microblogging service might suggest offering everything at half price. A SaaS business owner eager to undercut her competition might price things at cost, in hopes of making things up on volume.

Ugh.

The problem with pricing too low is that at best you devalue what you’re selling. And if you start high because you’re willing to end low, that’s bad, too. From the buyer’s perspective, if you’re willing to sell the thing for 50% of what you told them the price was, you’ve now established yourself as a dishonest negotiator at best, and you’ve potentially again devalued what you’re selling, too.

I get that you want to close deals. I want that for you, too. And I’m certainly not suggesting that you be opposed to the act of negotiation. I am, however, suggesting that if you’re willing to significantly cut rates from what you initially offered, there should be more reason than simply desperation to get a deal. There should be compromise or trade.

That means understanding what your levers are: I’ll cut your rate on this SaaS deal if you’ll agree to a press release and a longer time commitment. I’ll sell you these ads at half-off, but they must run in the next 45 days.

If you need to offer steep discounts to every customer to close deals, you’re priced too high.

And if no one ever bumps on your pricing at all, you’re probably priced too low. Or you’re perfect at setting prices. But let’s be honest — it’s probably the first thing!