How To Identify And Adopt Your Ideal Pricing Strategy


How you price your products and services has a major impact on your business’s overall success. While you don’t want to overcharge your customers and/or clients, you also don’t want to sell yourself short or underestimate your value just to attract buyers.

From tiers to introductory pricing and more, there are many approaches to pricing you can experiment with. To that end, 15 members of Forbes Business Council shared their tips for adopting a pricing strategy that works.

1. Avoid Commoditizing Your Product Or Service

The key to a smart pricing strategy is to avoid commoditizing your product or service. That’s a brutal self-inflicted wound. Heavily research your competitors’ pricing and then drill down into the differences in your offerings. That way, if you are adding more value, you command a higher price tag and the client won’t blink at the premium. – Andrew Ellenberg, Rise Integrated Marketing

2. Define Your Target Customers’ Needs

Entrepreneurs are notorious for leaving money on the table. Pricing always follows the Pareto Principle, with an ever-smaller percentage of customers willing to spend an ever-increasing amount of money with your company. Start with finding the 20% of your existing customers that will spend more money with you. Then, define their needs and offer a premium option. – Christian Brim, Core Group


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3. Segment Customers Using Buyer Personas

First, segment customers by their buyer persona, including their willingness and ability to pay. Then, embark upon a strategy that involves catering to the individual needs and pocketbooks of various personas. That could mean removing some features for lower-priced bargain hunters that still want the product or service. Some even perform this function by using completely alternative branding. – Nate Nead, SEO.co

4. Don’t Lower Your Value

Know your own worth and don’t be afraid to charge accordingly. Do not lower your value just because a lead says you should. Be sure that you have a defined pricing structure for each service offering. Do not deviate from it, regardless of the circumstances. Consistency in pricing is crucial to financial accountability and allows for greater transparency in advertising your prices. – Stacey Burke, Stacey E. Burke, P.C.

5. Go After Quality Versus Quantity

Know your customer and don’t be scared to go after quality versus quantity. For the tiered membership programs we work on, recency, frequency and previous sale amounts inform what level we ask current members to renew at. For prospective members, we ask them to join the level with the highest retention so that programs are quality-driven rather than focused on one-time, low-dollar customers. – Erin Weaver, Pennington Gray

6. Offer Flexibility

Pricing strategy should offer flexibility but not confuse the buyer. Also, it should not make it very difficult for a buyer to compare and evaluate as this can lead to decision fatigue. I suggest offering two to three options, with the clear and highlighted demarcation of the value proposition. In fact you should ideally suggest which option suits for which customer profile and use case. – Abhishek Rungta, Indus Net Technologies (INT.)

7. Study Your Competition And Determine The Minimum Price To Cover Costs

There are several pricing strategies depending on the value of the promotion (premium price), market penetration (low cost), mass market adoption (price skimming), emotional purchase (psychological pricing) or volume maximization (bundling). There are mainly two approaches to fix an optimal price: top-down where you study your competition and bottom-up to determine the minimum price to cover your costs. – Fabrice Testa, Maana Electric

8. Provide A Low Cost For High Volume

It all depends on the product or service and the nature of such product or service. That said, being able to provide a low cost to high volumes will enable a strong base client on which you’ll be able to get repeat business and/or additional revenue through upsell opportunities presented to them. – Howard Rosen, LifeWIRE Corp

9. Cut Competitors’ Prices By Only A Few Cents

The most important aspect for us is to do comparisons by cutting the competitor’s prices by only a few cents, which always proves successful for our company. We also offer BOGO or buy-one-get-one-free incentives, free shipping and discounts off orders when customers reach a specific sale range in our slow season. – Tammy Sons, Tn Nursery

10. Test And Validate Price Levels

Conduct research! Many times, product developers will do research to understand if the product and its features are appealing to customers. Customer feedback is also valuable as it relates to pricing. Test and validate price levels, tiers and models using qualitative and quantitative research. This approach saves the team from guessing or running into problems later. – Kevin Namaky, Gurulocity Brand Management Institute

11. Reverse Engineer Your Growth Targets

Pricing for a first-year company trying to establish credibility and “referenceability” with customers should look different than pricing for a company that is better established. If growth includes market capture from an established incumbent, then your pricing strategy may be aggressive. If your positioning is exclusive, your pricing may be intentionally high. – Hilmon Sorey, ClozeLoop

12. Make Their Investments Worthwhile

Whatever your ultimate pricing structure is, make sure you position your products, services and company overall to not be in a race to the bottom. No matter how commoditized your offering might seem or actually be, you can wrap a value-added set of features, services and approaches around them to make paying a premium worthwhile. – Esther Kestenbaum Prozan, Ruby Has Fulfillment

13. Perform Market Research

It completely depends on the product and the brand. If an item is handmade, limited edition or available in short supply, then naturally the price will start at a higher level or increase. Luxury brands like Chanel increase their prices by 20% nearly every year in order to maintain a level of prestige and exclusivity. Begin by performing market research of similar products or services. – Veronica H. Speck, VHS Ventures

14. Consider Usage-Based Pricing

With SaaS startups, it’s essential to consider usage-based pricing that will change based on utilization ratios. For example, you may price according to the amount of product used when there is low product usage or raise prices if the usage has increased significantly. It enables you to cater to a diverse customer pool, growing as your customer grows. – Bhaskar Ahuja , Originscale Corp

15. Use The Freemium Model

Pricing strategies will inevitably change for different markets and propositions, but the freemium model is fast gaining popularity as a way to encourage sign-ups, gather data, build relationships and hopefully convert those users into paying customers. – Oscar White, Beyonk



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