Pricing strategies for your business


The key components of price are costs (fixed and variable), profits, the value created for the customer, and competitor prices.

Cost Plus Pricing

In cost-plus pricing, the profit percentage is decided and added to the cost of goods sold (COGS) to get the product’s price.

Competition Based Pricing

Here, the price is determined by demand and supply. Your price will be close to the price of your competitors. 

Dynamic Pricing

The goal of dynamic pricing is to allow a company that sells goods or services to adjust prices on the fly in response to market demands. 

Freemium Pricing

In Freemium pricing, a basic free product/s is offered to the customer for free. The customer has the option to buy priced products that offer more benefits and features.

High-Low Pricing

Also known as discount pricing strategy, in this kind of pricing one product is launched at a high price. After some time, the product is offered at a high discount. 

Hourly Pricing

Hourly pricing works in service-related businesses where the price is charged on a man-hour basis. Consultants and freelancers use hourly pricing.

Skimming Pricing

In this pricing strategy, the product is launched at a premium price. Innovative technology products are priced this way. E.g. iPhones. 

Penetration Pricing

This is the opposite of skimming pricing. In this pricing type, the product is launched at a low price compared to the competitor’s price to attract new customers.

Premium Pricing

Premium prices are usually charged by companies who have built a good brand name or are selling products in the luxury segment.

Project-Based Pricing

Here, the price is charged on a project basis. This kind of price is also charged by consultants, contractors, and freelancers.

Value-Based Pricing

In Value-Based pricing, the price is a percentage of the value the product brings to the customer. A lot of B2B products are priced in this way.

Bundle Pricing

In Bundle-pricing, products are bundled together and offered at a price less than the price of the individual items if bought separately. 

Psychological Pricing

Psychological pricing involves playing with the customer’s mind. For example, pricing a product at $9.99 instead of $10 is a type of psychological pricing.

Geographic Pricing

In this type of pricing, the price may vary as per the geographic location. Sometimes prices can vary between different retailers in different neighborhoods.