Pricing Strategy Fundamentals

The set of methods and principles a business uses to set the price of its products or services to achieve specific business objectives.

To capture value, generate revenue, and align price with customer perception, costs, and competition.

Customer, Cost, and Competition.

A pricing method where the selling price is determined by adding a fixed markup percentage to the product's cost.

Selling Price = Unit Cost × (1 + Markup Percentage).

Setting price primarily based on the perceived value to the customer rather than on the cost of production.

Pricing determined mainly by analyzing competitors' prices, often matching, undercutting, or positioning relative to them.

Pricing adjusted according to the level of customer demand for a product at different times or segments.

A strategy where prices fluctuate in near real-time based on market demand, supply, competitor prices, or customer profile.

Setting a low initial price to enter a market quickly and attract customers, then potentially raising it later.

Setting a high initial price to capture consumers willing to pay a premium, then lowering it over time.

Keeping prices deliberately high to signal quality, exclusivity, or luxury status.