Once you find a price point that fits, it’s time to do a little test marketing. This doesn’t need to be an elaborate process. You can easily test the price simply by talking to trusted friends, colleagues and advisors. Anyone who you can trust to give you candid advice is an ideal person to bring into the discussion.

Early on, as you tried to find the right price for your product, you might have asked those same people a fairly nebulous question like “What would you pay for this product?” or “How much should I charge for my service?” The more people you ask, the wider the range of feedback you tend to get.

Now that you’ve settled on a price, however, you’re not looking for an acceptable range. You’re looking for confirmation that your target price point is the right one. This means asking for very specific feedback. If you’ve decided your product should be in the $20 range, for instance, you’ll want to ask something like “Would you pay $19.95 for this?”

If you have a large enough pool of trusted people to ask, you might want to raise or lower the price by 10 or 20%, and take note of any feedback you get. You might find that even a tiny difference of a few cents can yield big differences. This process allows you to determine exactly where those sweet spots are.

Now that you’ve gotten in the right ballpark, it’s time to bring everything together. That means you need to start thinking about how your price relates to your net profits. Even a slight misalignment can cause a big loss in real profits.

You’ve already added up your per-unit costs, and you should have a decent idea what your gross profits will be. If your costs are $0.99 and your ideal price point is $2.99, that’s a $2 gross profit. In most cases, however, there are other businesses that will take a slice of that profit.

If your product will be sold on a store shelf, the retailer will take a cut. If your product needs to be taken from the factory to that retailer, the distributor will take a portion of it as well. Depending on the nature of your business, you could easily have a half-dozen people taking a bite out of every unit’s retail sale price.

A price that might have made sense at the gross profit margin might not make as much sense with a lower net profit. If you’re competing with similarly priced products, you might be tempted to lower the price, just to gain a slight edge. It’s important to treat these price revisions with just as much case as your initial pricing. Unless you have a guarantee of a very high volume of sales, a lean profit margin is generally not the best way to gain an edge against the competition.

Should you cut your costs? Should you increase your quality and eat the cost? Will the market support your current product at a higher price? These questions can be maddening, but they need to be carefully answered to find a stable price point with a strong profit margin.

Then there’s the question of your sales channels. The right sales channel can completely reshape your net profits, allowing you to cut out those middlemen by connecting directly with the consumer. For the right kind of business model, this can be a powerful option.

In our example of an organic cookie company, you could try directly marketing through the internet. Instead of a retailer and a distributor, those cookies are going directly to the customer, and the only additional cost coming from shipping fees. Of course, you won’t have the advantages of those grocery stores selling your cookies for you, and that generally means you’ll be selling a lot less cookies overall.

Is it better to have a fraction of the sales, but keep all of that $2 per-cookie profit? Or is it better to only see only a $0.50 per-cookie return, and count on the increased volume to make up the difference? The answer will depend on your situation, and on your willingness to take risks on how well those cookies will sell.

That may sound uncertain, and to a degree it is. Taking on that risk is part of an entrepreneur’s job description. But if you’ve done your homework, and really taken the time to do the pricing process correctly, it’s much less risky than simply taking a best guess at what your product or service should cost.