The Ultimate Guide to Pricing Strategies & Models

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data-ga_nav_type="header_nav" data-ga_nav_tree_text="Videos > Marketing Against the Grain"> <div class="blog-nav-card-thumbnail"> <img src="//53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/MAT%20-%20Show%20Tile%20Small.png" alt="" loading="lazy"> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Marketing Against the Grain <svg class="cl-icon -external-link" width="14" height="14" aria-hidden="true" aria-label="Link opens in a new window"> <use href="#cl-icon-external-link" /> </svg> </h4> <p class="blog-nav-card-description -small">Watch two cerebral CMOs tackle strategy, tactics, and trends</p> </div> </a> </li> <li> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card ga_nav_link" href="https://www.youtube.com/channel/UCaAx1xeTgF3rs4rBPDq6-Kw" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="Videos > HubSpot"> <div 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class="blog-nav-primary-menu-item"> <button class="blog-nav-menu-trigger blog-nav-media-dropdown-trigger" aria-controls="podcasts-mega-menu-submenu" aria-expanded="false"> <h6>Podcasts</h6> <svg class="cl-icon -down-arrow" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </button> <div id="podcasts-mega-menu-submenu" class="blog-nav-menu -light"> <div class="blog-nav-menu-content"> <div class="blog-nav-media-dropdown"> <div class="blog-nav-media-dropdown-content cl-page-width"> <div class="blog-nav-menu-header blog-nav-media-dropdown-header"> <h3>Podcasts</h3> <p>HubSpot Podcast Network is the destination for business professionals who seek the best education on how to grow a business.</p> </div> <div class="blog-nav-media-dropdown-container"> <div class="blog-nav-media-dropdown-cards-block"> <ul> <li> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card ga_nav_link" href="https://link.chtbl.com/3iN6uLVq" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="Podcasts > My First Million" data-navigation-params="blognavcard-podcasts-myfirstmillion"> <div class="blog-nav-card-thumbnail"> <img src="//53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/MFM_Podcast_Art_Small.png" alt="" loading="lazy"> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> My First Million </h4> <p class="blog-nav-card-description -small">Each week, hosts Sam Parr and Shaan Puri explore new business ideas based on trends and opportunities in the market</p> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card ga_nav_link" href="https://link.chtbl.com/RzH0FxKT" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="Podcasts > Goal Digger " 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src="//53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/Another%20Bite%20cover%20artwork_Small.jpg" alt="" loading="lazy"> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Another Bite </h4> <p class="blog-nav-card-description -small">Each week, Another Bite breaks down the latest and greatest pitches from Shark Tank</p> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card ga_nav_link" href="https://link.chtbl.com/5BUTJJYi" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="Podcasts > Business Made Simple" data-navigation-params="blognavcard-podcasts-businessmadesimple"> <div class="blog-nav-card-thumbnail"> <img 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src="//53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/MAT%20-%20Show%20Tile%20Small.png" alt="" loading="lazy"> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Marketing Against the Grain </h4> <p class="blog-nav-card-description -small">HubSpot CMO Kipp Bodnar and Zapier CMO Kieran Flanagan share what's happening now in marketing and what's ahead</p> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> </ul> </div> <ul class="blog-nav-media-dropdown-text-links-block"> <li> <a class="blog-nav-media-dropdown-text-link" href="https://link.chtbl.com/tbteICG8" target="_blank">Online Marketing Made Easy</a> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card" href="https://link.chtbl.com/tbteICG8" target="_blank"> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Online Marketing Made Easy </h4> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-media-dropdown-text-link" href="https://link.chtbl.com/kLhOjV53" target="_blank">The Product Boss</a> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card" href="https://link.chtbl.com/kLhOjV53" target="_blank"> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> The Product Boss </h4> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-media-dropdown-text-link" href="https://link.chtbl.com/LJaBwFPi" target="_blank">Nudge</a> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card" href="https://link.chtbl.com/LJaBwFPi" target="_blank"> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Nudge </h4> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-media-dropdown-text-link" href="https://link.chtbl.com/t2kxrrUM" target="_blank">Side Hustle Pro</a> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card" href="https://link.chtbl.com/t2kxrrUM" target="_blank"> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Side Hustle Pro </h4> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-media-dropdown-text-link" href="https://link.chtbl.com/RYM8mDQs" target="_blank">Outbound Squad</a> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card" href="https://link.chtbl.com/RYM8mDQs" target="_blank"> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Outbound Squad </h4> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> </ul> </div> <div class="blog-nav-media-dropdown-cta-container"> <a href="https://blog.hubspot.com/podcasts" class="blog-nav-media-dropdown-cta cl-button -primary ga_nav_link " data-ga_nav_type="header_nav" data-ga_nav_tree_text="Podcasts > See all podcasts"> See all podcasts </a> </div> </div> </div> </div> </div> </li> <li class="blog-nav-primary-menu-item"> <button class="blog-nav-menu-trigger blog-nav-media-dropdown-trigger" aria-controls="resources-mega-menu-submenu" aria-expanded="false"> <h6>Resources</h6> <svg class="cl-icon -down-arrow" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </button> <div id="resources-mega-menu-submenu" class="blog-nav-menu -light"> <div class="blog-nav-menu-content"> <div class="blog-nav-media-dropdown"> <div class="blog-nav-media-dropdown-content cl-page-width"> <div class="blog-nav-menu-header blog-nav-media-dropdown-header"> <h3>Resources</h3> <p>Expand your knowledge and take control of your career with our in-depth guides, lessons, and tools.</p> </div> <div class="blog-nav-media-dropdown-container"> <div class="blog-nav-media-dropdown-cards-block"> <ul> <li> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card ga_nav_link" href="https://academy.hubspot.com" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="Resources > Academy" data-navigation-params="blognavcard-resources-freecoursesandcertifications"> <div class="blog-nav-card-thumbnail"> <img src="//53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/resources_academy_small.png" alt="" loading="lazy"> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Academy </h4> <p class="blog-nav-card-description -small">Learn and get certified in the latest business trends from leading experts</p> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card ga_nav_link" href="https://www.hubspot.com/resources/template" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="Resources > Templates"> <div class="blog-nav-card-thumbnail"> <img src="//53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/resources_templates_small.png" alt="" loading="lazy"> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Templates </h4> <p class="blog-nav-card-description -small">Interactive documents and spreadsheets to customize for your business's needs</p> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card ga_nav_link" href="https://www.hubspot.com/resources/ebook" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="Resources > Ebooks"> <div class="blog-nav-card-thumbnail"> <img src="//53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/resources_ebooks_small.png" alt="" loading="lazy"> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Ebooks </h4> <p class="blog-nav-card-description -small">In-depth guides on dozens of topics pertaining to the marketing, sales, and customer service industries</p> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card ga_nav_link" href="https://www.hubspot.com/resources/kit" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="Resources > Kits"> <div class="blog-nav-card-thumbnail"> <img src="//53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/resources_kits_small.png" alt="" loading="lazy"> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Kits </h4> <p class="blog-nav-card-description -small">Multi-use content bundled into one download to inform and empower you and your team</p> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-media-dropdown-card ga_nav_link" href="https://www.hubspot.com/free-business-tools" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="Resources > Tools"> <div class="blog-nav-card-thumbnail"> <img src="//53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/resources_tools_small.png" alt="" loading="lazy"> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Tools </h4> <p class="blog-nav-card-description -small">Customized assets for better branding, strategy, and insights</p> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> </ul> </div> <ul class="blog-nav-media-dropdown-text-links-block"> </ul> </div> <div class="blog-nav-media-dropdown-cta-container"> </div> </div> </div> </div> </div> </li> <li class="blog-nav-primary-menu-item -site-search"> <button class="blog-nav-site-search-trigger" aria-expanded="false" data-cl-modal="blog-search-modal"> <span class="visually-hidden">Search...</span> <svg class="cl-icon -search" aria-hidden="true"> <use href="#cl-icon-search"></use> </svg> </button> </li> <li class="blog-nav-primary-menu-item -hubspot-products"> <button class="blog-nav-menu-trigger blog-nav-media-dropdown-trigger" aria-controls="hubspot-products-mega-menu-submenu" aria-expanded="false"> <h6>HubSpot Products</h6> <svg class="cl-icon -down-arrow" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </button> <div id="hubspot-products-mega-menu-submenu" class="blog-nav-menu -light"> <div class="blog-nav-menu-content"> <div class="blog-nav-hubspot-products-dropdown cl-page-width"> <div class="blog-nav-menu-header blog-nav-hubspot-products-dropdown-header"> <h3>The HubSpot Customer Platform</h3> <p>All of HubSpot's marketing, sales, customer service, CMS, operations, and commerce software on one platform. <a class="hsg-nav__subheader-highlight" href="https://www.hubspot.com/pricing/marketing/enterprise?products=marketing-hub-professional_1&term=annual" target="_blank" rel="noopener noreferrer">See pricing</a></p> </div> <div class="blog-nav-hubspot-products-dropdown-links"> <ul class="blog-nav-menu-list blog-nav-hubspot-product-cards-list"> <li class="blog-nav-hubspot-product-cards-list-item"> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-hs-info-card ga_nav_link" href="//www.hubspot.com/products/crm" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="HubSpot Products > Free HubSpot CRM"> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Free HubSpot CRM </h4> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use href="#cl-icon-down" /> </svg> </div> </a> </li> <li class="blog-nav-hubspot-product-cards-list-item"> <a class="blog-nav-card cl-card -green -hoverable -light blog-nav-hs-info-card ga_nav_link" href="//www.hubspot.com/products/get-started" target="_blank" data-ga_nav_type="header_nav" data-ga_nav_tree_text="HubSpot Products > Overview of all products"> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Overview of all products </h4> </div> <div 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id="marketing-linear1" gradientunits="userSpaceOnUse" x1="481.9" y1="607.34" x2="1438.1" y2="1312.66" gradienttransform="matrix(0.0125,0,0,0.0125,0,0)"> <stop offset="0.18" style="stop-color:rgb(100%,50.980392%,30.588235%);stop-opacity:1;" /> <stop offset="0.82" style="stop-color:rgb(100%,36.078431%,20.784314%);stop-opacity:1;" /> </lineargradient> </defs> <g id="marketing-surface1"> <path style=" stroke:none;fill-rule:nonzero;fill:rgb(100%,36.078431%,20.784314%);fill-opacity:1;" d="M 12 9 C 10.34375 9 9 10.34375 9 12 L 9 20 C 9 21.3125 9.855469 22.476562 11.109375 22.867188 C 12.363281 23.253906 13.726562 22.78125 14.472656 21.699219 L 19.972656 13.699219 C 20.601562 12.785156 20.675781 11.59375 20.15625 10.609375 C 19.640625 9.621094 18.621094 9.003906 17.507812 9 Z M 12 9 " /> <path style=" stroke:none;fill-rule:nonzero;fill:url(#marketing-linear0);" d="M 12 15 C 13.65625 15 15 13.65625 15 12 L 15 4 C 15 2.6875 14.144531 1.523438 12.890625 1.132812 C 11.636719 0.746094 10.273438 1.21875 9.527344 2.300781 L 4.027344 10.300781 C 3.394531 11.21875 3.324219 12.410156 3.84375 13.398438 C 4.363281 14.382812 5.386719 15 6.5 15 Z M 12 15 " /> <path style=" stroke:none;fill-rule:nonzero;fill:rgb(100%,36.078431%,20.784314%);fill-opacity:1;" d="M 15 4 C 15 5.65625 13.65625 7 12 7 C 10.34375 7 9 5.65625 9 4 C 9 2.34375 10.34375 1 12 1 C 13.65625 1 15 2.34375 15 4 Z M 15 4 " /> <path style=" stroke:none;fill-rule:nonzero;fill:url(#marketing-linear1);" d="M 17.5 15 L 6.5 15 C 4.84375 15 3.5 13.65625 3.5 12 C 3.5 10.34375 4.84375 9 6.5 9 L 17.5 9 C 19.15625 9 20.5 10.34375 20.5 12 C 20.5 13.65625 19.15625 15 17.5 15 Z M 17.5 15 " /> </g> </svg> </div> <div class="blog-nav-card-body"> <h4 class="blog-nav-card-title"> Marketing Hub </h4> <p class="blog-nav-card-description -small">Marketing automation software. <span class="hsg-nav__subheader-highlight">Free and premium plans</span></p> </div> <div class="blog-nav-card-icon"> <svg class="cl-icon" aria-hidden="true"> <use 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man studying a book to figure out the best model for his business" width="595" height="400" srcset="https://www.hubspot.com/hs-fs/hubfs/pricing-strategy-4.jpg?width=298&height=200&name=pricing-strategy-4.jpg 298w, https://www.hubspot.com/hs-fs/hubfs/pricing-strategy-4.jpg?width=595&height=400&name=pricing-strategy-4.jpg 595w, https://www.hubspot.com/hs-fs/hubfs/pricing-strategy-4.jpg?width=893&height=600&name=pricing-strategy-4.jpg 893w, https://www.hubspot.com/hs-fs/hubfs/pricing-strategy-4.jpg?width=1190&height=800&name=pricing-strategy-4.jpg 1190w, https://www.hubspot.com/hs-fs/hubfs/pricing-strategy-4.jpg?width=1488&height=1000&name=pricing-strategy-4.jpg 1488w, https://www.hubspot.com/hs-fs/hubfs/pricing-strategy-4.jpg?width=1785&height=1200&name=pricing-strategy-4.jpg 1785w" sizes="(max-width: 595px) 100vw, 595px"> </div> <div class="pillar-post-header-dates"> <p class="pillar-post-header-dates-updated">Updated: <time datetime=""> 09/13/24 </time> </p> <p class="pillar-post-header-dates-created ">Published: <time datetime="2019-21-05"> 05/21/19 </time></p> </div> </div> </div> </section></div> <div class="hsg-rich-text blog-post-body"> <div class="hsg-rich-text__wrapper"> <span id="hs_cos_wrapper_post_body" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_rich_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="rich_text"><p>Pricing your products and services can be challenging, especially since <a href="https://www.statista.com/statistics/1239795/price-comparison-online-shopping-habits/" rel="noopener" target="_blank">over 80% of consumers</a> say they compare prices between competitors before making a purchase decision.</p>  <p>Set prices too high, and you risk losing sales. Set them too low, and you lose out on revenue.</p> <p>Fortunately, pricing doesn’t have to be a gamble. There are many pricing models and strategies to help you find the right prices for your audience and revenue goals.</p> <p>That’s why I created this guide.</p> <p>Whether you’re a business beginner or a pricing pro, the tactics and strategies in this guide will get you comfortable with pricing your products. Bookmark this guide for later and use the chapter links to jump around to sections of interest.</p> <p><span class="hs-cta-wrapper" id="hs-cta-wrapper-0a91ecc7-da40-4a44-a3e0-5f04fa4c0062"><span class="hs-cta-node hs-cta-0a91ecc7-da40-4a44-a3e0-5f04fa4c0062" id="hs-cta-0a91ecc7-da40-4a44-a3e0-5f04fa4c0062"><a href="https://cta-redirect.hubspot.com/cta/redirect/53/0a91ecc7-da40-4a44-a3e0-5f04fa4c0062" target="_blank" rel="noopener"><img class="hs-cta-img" id="hs-cta-img-0a91ecc7-da40-4a44-a3e0-5f04fa4c0062" style="border-width:0px;" height="60" width="488" src="https://no-cache.hubspot.com/cta/default/53/0a91ecc7-da40-4a44-a3e0-5f04fa4c0062.png" alt="Download Now: Free Sales Pricing Strategy Calculator"></a></span><script charset="utf-8" src="/hs/cta/cta/current.js" nonce="pVDyqOYx2udrOs6BTdiDIQ=="></script><script type="text/javascript" nonce="pVDyqOYx2udrOs6BTdiDIQ=="> hbspt.cta._relativeUrls=true;hbspt.cta.load(53, '0a91ecc7-da40-4a44-a3e0-5f04fa4c0062', {"useNewLoader":"true","region":"na1"}); </script></span></p> <p><strong>Table of Contents</strong></p> <ul> <li><a href="#pricing-strategy">Pricing Strategy</a></li> <li><a href="#pricing-analysis">Pricing Analysis</a></li> <li><a href="#cost-margin-markup-in-pricing">Cost, Margin, & Markup in Pricing</a></li> <li><a href="#types-of-pricing-strategies">Types of Pricing Strategies</a></li> <li><a href="#pricing-strategy-examples">Pricing Strategy Examples</a></li> <li><a href="#pricing-models">Pricing Models</a></li> <li><a href="#how-to-create-a-pricing-strategy">How to Create a Pricing Strategy</a></li> <li><a href="#pricing-models-based-on-industry-or-business">Pricing Models Based on Industry or Business</a></li> </ul> <div id="hs_cos_wrapper_widget_ba9545cf-43b4-48ba-af79-712f2dcb26f4" class="hs_cos_wrapper hs_cos_wrapper_widget hs_cos_wrapper_type_module" style="" data-hs-cos-general-type="widget" data-hs-cos-type="module"> <section id="widget_ba9545cf-43b4-48ba-af79-712f2dcb26f4" class="csol-section csol-featured-snippet -blog -white -padding-top-xs -padding-bottom-xs"> <div class="csol-section-wrapper"> <div class="csol-featured-snippet-container -light"> <div class="csol-featured-snippet-header"> <img src="https://53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/component-library/sprocket.svg" alt="" class="" data-csol-svg-source="https://53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/component-library/sprocket.svg" width="48" height="48" loading="lazy"><h2 class="csol-featured-snippet-heading">Pricing Strategy</h2></div> <div class="csol-featured-snippet-paragraph"> <p>A pricing strategy is a model or method used to establish the best price for a product or service. It helps you choose prices to maximize profits and shareholder value while considering consumer and market demand.</p> </div> </div> </div> </section> </div> <p>If only pricing was as simple as its definition — there’s a lot that goes into the process.</p> <p>Pricing strategies account for many of your business factors, including:</p> <ul> <li>Revenue goals.</li> <li>Marketing objectives.</li> <li>Target audience.</li> <li>Brand positioning.</li> <li>Product attributes.</li> </ul> <p>They’re also influenced by external factors like consumer demand, competitor pricing, and overall market and economic trends.</p> <div class="hs-responsive-embed-wrapper hs-responsive-embed" style="width: 100%; height: auto; position: relative; overflow: hidden; padding: 0; max-width: 560px; max-height: 315px; min-width: 256px; margin: 0px auto; display: block;"> <div class="hs-responsive-embed-inner-wrapper" style="position: relative; overflow: hidden; max-width: 100%; padding-bottom: 56.25%; margin: 0;"><iframe class="hs-responsive-embed-iframe" style="position: absolute; top: 0; left: 0; width: 100%; height: 100%; border: none;" title="YouTube video player" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" xml="lang" src="https://www.youtube.com/embed/_pk-F4Ge590?si=2EeK83UR6bDyGI7L" width="560" height="315" frameborder="0" allowfullscreen data-service="youtube"></iframe></div> </div> <p>It’s not uncommon for entrepreneurs and business owners to skim over pricing. They often look at the <a href="https://blog.hubspot.com/sales/cost-of-goods-sold?" rel="noopener" target="_blank">cost of their products (COGS)</a>, consider their competitors’ rates, and tweak their own <a href="https://blog.hubspot.com/sales/selling-price?" rel="noopener" target="_blank">selling price</a> by a few dollars. While your COGS and competitors are important, they shouldn’t be at the center of your pricing strategy.</p> <p>The best pricing strategy <a href="https://study.com/learn/lesson/profit-maximization-theory-formula.html" rel="noopener" target="_blank">maximizes your profit</a> <em>and</em> revenue.</p> <p>Before I talk about pricing strategies, let’s review an important pricing concept that will apply regardless of what strategies you use.</p> <div id="hs_cos_wrapper_widget_6dc0633b-aaae-4477-ad5e-79d5695efea4" class="hs_cos_wrapper hs_cos_wrapper_widget hs_cos_wrapper_type_module" style="" data-hs-cos-general-type="widget" data-hs-cos-type="module"> <section class="blog-fwcta" data-state="offer"> <div class="blog-fwcta-offer"> <div class="blog-fwcta-offer-content"> <div class="blog-fwcta-offer-img"> <img src="https://offers.hubspot.com/hubfs/Image%20Hackathon%20%E2%80%93%20Vertical%20(45).png" loading="lazy" alt=""> </div> <div class="blog-fwcta-offer-text"> <h3 class="blog-fwcta-offer-title">Free Sales Pricing Strategy Calculator</h3> <p class="blog-fwcta-offer-subtitle">Determine the best pricing strategy for your business with this free calculator and template.</p> <ul class="blog-fwcta-offer-value-prop-list"> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Cost-Plus Pricing </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Skimming Strategy </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Value-Based Pricing </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> And More! </li> </ul> <div class="blog-fwcta-offer-cta-container"><button class="blog-fwcta-form-initiation-button blog-fwcta-offer-cta">Get Your Free Template</button> <a class="blog-fwcta-offer-cta -learn-more-text" href="https://offers.hubspot.com/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank"> Learn more <svg class="blog-fwcta-offer-external-link cl-icon cl-textLink-icon -large" aria-label="Link opens in a new window"> <use href="#cl-icon-external-link" /> </svg> <span class="visually-hidden"></span> </a> <a class="blog-fwcta-offer-cta -form-text" href="https://offers.hubspot.com/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank"> Get Your Free Template <span class="visually-hidden"></span> </a> </div> </div> </div> </div> <div class="blog-fwcta-form"> <div class="blog-fwcta-form-content"> <style>@keyframes msf-progress { 0% { transform: scaleX(0); 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Ideally, you want your product to be <em>inelastic</em> — so that demand remains stable if prices do fluctuate.</p> <a id="pricing-analysis" data-hs-anchor="true"></a> <div id="hs_cos_wrapper_widget_fea5d501-9b9c-43e2-a82c-eeb0f185ab4c" class="hs_cos_wrapper hs_cos_wrapper_widget hs_cos_wrapper_type_module" style="" data-hs-cos-general-type="widget" data-hs-cos-type="module"> <section id="widget_fea5d501-9b9c-43e2-a82c-eeb0f185ab4c" class="csol-section csol-featured-snippet -blog -white -padding-top-xs -padding-bottom-xs"> <div class="csol-section-wrapper"> <div class="csol-featured-snippet-container -light"> <div class="csol-featured-snippet-header"> <img src="https://53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/component-library/sprocket.svg" alt="" class="" data-csol-svg-source="https://53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/component-library/sprocket.svg" width="48" height="48" loading="lazy"><h2 class="csol-featured-snippet-heading">Pricing Analysis</h2></div> <div class="csol-featured-snippet-paragraph"> <p>Pricing analysis is a process of evaluating your current pricing strategy against market demand. Generally, pricing analysis examines price independently of cost. The goal of a pricing analysis is to identify opportunities for pricing changes and improvements.</p> </div> </div> </div> </section> </div> <p>You typically conduct a pricing analysis when considering new product ideas, developing your positioning strategy, or running marketing tests. I also think it’s wise to run a price analysis once every year or two to evaluate your pricing against competitors and <a href="https://blog.hubspot.com/service/customer-needs" rel="noopener" target="_blank">consumer expectations</a>.</p> <p>Doing so preemptively avoids having to wait for poor <a href="https://www.hubspot.com/products/sales/sales-reports" rel="noopener" target="_blank">product and sales performance</a>. Likewise, a blunder in this regard can be calamitous and <a href="https://abcfinance.co.uk/invoice-finance/what-is-negative-cash-flow/" rel="noopener" target="_blank">result in negative cash flow</a> in the long term.</p> <h3>How to Conduct a Pricing Analysis</h3> <p>Conducting a pricing analysis is essential for setting competitive and profitable prices for your products or services. Here’s a step-by-step guide to help you through the process:</p> <h4>1. Determine the true cost of your product or service.</h4> <p>To calculate the true cost of a product or service that you sell, you’ll want to recognize all of your expenses, including both fixed and variable costs.</p> <p>Once you’ve determined these costs, subtract them from the price you’ve already set or plan to set for your product or service.</p> <p>Cost = Sales – (fixed + variable costs)</p> <h4>2. Understand how your target market and customer base respond to the pricing structure.</h4> <p>In my experience, surveys, focus groups, or questionnaires can be helpful in determining how the market responds to your pricing model. You’ll get a glimpse into what your target customers value and how much they’re willing to pay for the value your product or service provides.</p> <h4>3. Analyze the prices set by your competitors.</h4> <p>There are two types of competitors to consider when conducting a pricing analysis: direct and indirect.</p> <p>Direct competitors are those who sell the exact same product that you sell. These types of competitors are likely to compete on price, so they should be a priority to review in your pricing analysis.</p> <p>Indirect competitors are those who sell alternative products that are comparable to what you sell. If a customer is looking for your product, but it’s out of stock or it’s out of their price range, they may go to an indirect competitor to get a similar product.</p> <p>I suggest creating a <a href="https://blog.hubspot.com/marketing/competitive-analysis-kit" rel="noopener" target="_blank">competitive analysis</a> chart to visualize how your pricing compares to competitors and identify any gaps or opportunities.</p> <h4>4. Review any legal or ethical constraints to cost and price.</h4> <p>There’s a fine line between competing on price and falling into legal and ethical trouble. You’ll want to have a firm understanding of <a href="https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing" rel="noopener" target="_blank">price-fixing</a> and <a href="https://www.investopedia.com/terms/p/predatory-pricing.asp" rel="noopener" target="_blank">predatory pricing</a> while doing your pricing analysis in order to steer clear of these practices.</p> <p>Analyzing your current pricing model is necessary to determine a new (and better!) pricing strategy. This applies whether you're developing a new product, upgrading your current one, or simply repositioning your marketing strategy.</p> <a id="cost-margin-markup-in-pricing" data-hs-anchor="true"></a> <h2>Cost, Margin, & Markup in Pricing</h2> <p>Understanding the role of cost, margin, and markup is also essential when choosing a pricing strategy, especially if you want your <a href="https://blog.hubspot.com/sales/cost-based-pricing" rel="noopener" target="_blank">pricing to be cost-based</a>.</p> <h3><strong>Cost</strong></h3> <p>Cost refers to the fees you incur from manufacturing, sourcing, or creating the product you sell. That includes the materials themselves, the cost of labor, the fees paid to suppliers, and even the losses. Cost doesn’t include overhead and operational expenses such as marketing, advertising, maintenance, or bills.</p> <h3><strong>Margin</strong></h3> <p>Margin, often referred to as <a href="https://blog.hubspot.com/sales/good-profit-margin-for-product" rel="noopener" target="_blank">profit margin</a>, is the difference between the selling price of a product and its cost, expressed as a percentage of the selling price. It shows you the profitability of your product.</p> <p>There are two types of margins:</p> <ul> <li><strong>Gross margin.</strong> This is calculated as (Sales Revenue – Cost of Goods Sold) / Sales Revenue. It reflects the profitability before accounting for operating expenses.</li> <li><strong>Net margin.</strong> This is calculated as (Net Profit / Sales Revenue). It includes all expenses, providing a more comprehensive view of profitability.</li> </ul> <p>For example, if a product is sold for $100 and the cost to produce it is $60:</p> <p>Gross Margin = (100 − 60/100) × 100 = 40%</p> <h3><strong>Markup</strong></h3> <p><a href="https://blog.hubspot.com/sales/cost-plus-pricing" rel="noopener" target="_blank">Markup</a> refers to the additional amount you charge for your product over the production and manufacturing fees. It allows you to set prices that align with market expectations and your business goals.</p> <p>For example, if a product costs $70 to produce and you sell it for $100, the markup is $30, or approximately 42.9% of the cost price.</p> <p>Now, I’ll walk you through some common pricing strategies. As we do so, it’s important to note that these aren’t necessarily standalone strategies — many can be combined when setting prices for your products and services.</p> <a id="types-of-pricing-strategies" data-hs-anchor="true"></a> <div id="hs_cos_wrapper_widget_7fe1fdfd-9599-4cd1-a000-9a4ff8030cd5" class="hs_cos_wrapper hs_cos_wrapper_widget hs_cos_wrapper_type_module" style="" data-hs-cos-general-type="widget" data-hs-cos-type="module"> <section class="blog-fwcta" data-state="offer"> <div class="blog-fwcta-offer"> <div class="blog-fwcta-offer-content"> <div class="blog-fwcta-offer-img"> <img src="https://offers.hubspot.com/hubfs/Image%20Hackathon%20%E2%80%93%20Vertical%20(45).png" loading="lazy" alt=""> </div> <div class="blog-fwcta-offer-text"> <h3 class="blog-fwcta-offer-title">Free Sales Pricing Strategy Calculator</h3> <p class="blog-fwcta-offer-subtitle">Determine the best pricing strategy for your business with this free calculator and template.</p> <ul class="blog-fwcta-offer-value-prop-list"> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Cost-Plus Pricing </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Skimming Strategy </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Value-Based Pricing </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> And More! </li> </ul> <div class="blog-fwcta-offer-cta-container"><button class="blog-fwcta-form-initiation-button blog-fwcta-offer-cta">Get Your Free Template</button> <a class="blog-fwcta-offer-cta -learn-more-text" href="https://offers.hubspot.com/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank"> Learn more <svg class="blog-fwcta-offer-external-link cl-icon cl-textLink-icon -large" aria-label="Link opens in a new window"> <use href="#cl-icon-external-link" /> </svg> <span class="visually-hidden"></span> </a> <a class="blog-fwcta-offer-cta -form-text" href="https://offers.hubspot.com/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank"> Get Your Free Template <span class="visually-hidden"></span> </a> </div> </div> </div> </div> <div class="blog-fwcta-form"> <div class="blog-fwcta-form-content"> <style>@keyframes msf-progress { 0% { transform: scaleX(0); 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Competition-Based Pricing Strategy</h3> <p>Competition-based pricing is also known as competitive pricing or competitor-based pricing. This pricing strategy focuses on the existing market rate (<a href="https://blog.hubspot.com/sales/going-rate-pricing?" rel="noopener" target="_blank">or going rate</a>) for a company’s product or service; it doesn’t take into account the cost of its product or consumer demand.</p> <p>Instead, a competition-based pricing strategy uses the competitors’ prices as a benchmark. Businesses that compete in a highly saturated space may choose this strategy since a slight price difference may be the deciding factor for customers.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-1-20240911-7308979.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy example, competition-based "></p> <p>With <a href="https://blog.hubspot.com/sales/competition-based-pricing?" rel="noopener" target="_blank">competition-based pricing</a>, you can price your products slightly below your competition, the same as your competition, or slightly above your competition.</p> <p>For example, if you sold <a href="https://www.hubspot.com/products/marketing?" rel="noopener" target="_blank">marketing automation software</a>, and your competitors’ prices ranged from $19.99 per month to $39.99 per month, you’d choose a price between those two numbers, or even lower.</p> <p>I think a great example of a competitive pricing model is Amazon. The company uses automated repricing tools that constantly monitor competitor prices and adjust their prices accordingly. This strategy ensures Amazon’s prices are always competitive, often making them the lowest-priced option in the market.</p> <p>The approach has helped Amazon attract price-sensitive customers and maintain its dominance in the ecommerce space.</p> <h4>Competition-Based Pricing Strategy in Marketing</h4> <p>Consumers seek the best value, which isn’t always the lowest price. Competitive pricing can help your brand attract customers, especially if you offer something unique like exceptional customer service, a generous return policy, or <a href="https://blog.hubspot.com/service/customer-loyalty-program" rel="noopener" target="_blank">exclusive loyalty benefits</a>.</p> <table> <tbody> <tr> <td colspan="1" rowspan="1"> <p><strong>Advantages</strong></p> </td> <td colspan="1" rowspan="1"> <p><strong>Disadvantages</strong></p> </td> </tr> <tr> <td colspan="1" rowspan="1"> <ul> <li>Easy to implement.</li> <li>Ensures prices are competitive.</li> <li>Can be adjusted quickly in response to competitors' price changes.</li> </ul> </td> <td colspan="1" rowspan="1"> <ul> <li>May lead to a lack of unique value proposition.</li> <li>Can result in continuous undercutting and affect profitability.</li> <li>Focuses solely on competitors' prices, potentially ignoring production costs and customer value perception.</li> </ul> </td> </tr> </tbody> </table> <h3>2. Cost-Plus Pricing Strategy</h3> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-2-20240911-1952818.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, cost-plus pricing strategy "></p> <p>A cost-plus pricing strategy (also known as markup pricing) focuses solely on the <a href="https://blog.hubspot.com/sales/accounting-101" rel="noopener" target="_blank">cost of producing your product or service</a>, or your COGS.</p> <p>To apply the cost-plus method, add a fixed percentage to your product production cost.</p> <p>The formula is:</p> <p><em>Selling Price = Cost Price + (Cost Price × Markup Percentage)</em></p> <p>For example, let’s say you sell shoes. The total cost to produce one pair of shoes is $55. If you want to apply a 50% markup, the calculation would be:</p> <p><strong>Selling Price</strong> = $55 × (1 + 0.50) = $55 × 1.50 = $82.50</p> <p>Therefore, the selling price for each pair of shoes would be $82.50.</p> <p>Cost-plus pricing is typically used by retailers who sell physical products. This strategy isn’t the best fit for service-based or <a href="https://blog.hubspot.com/service/saas?" rel="noopener" target="_blank">SaaS companies</a> as their products typically offer far greater value than the cost to create them.</p> <h4>Cost-Plus Pricing Strategy in Marketing</h4> <p>I think cost-plus pricing works well when the competition is pricing using the same model. It won’t help you attract new customers if your competition is working to acquire customers rather than growing profits. Before executing this strategy, I suggest completing a pricing analysis that includes your closest competitors to make sure this strategy will help you meet your goals.</p> <table> <tbody> <tr> <td colspan="1" rowspan="1"> <p><strong>Advantages</strong></p> </td> <td colspan="1" rowspan="1"> <p><strong>Disadvantages</strong></p> </td> </tr> <tr> <td colspan="1" rowspan="1"> <ul> <li>Easy to calculate and implement.</li> <li>Justifies price changes to customers based on changes in production costs.</li> <li>Ensures all costs are covered.</li> </ul> </td> <td colspan="1" rowspan="1"> <ul> <li>Ignores market conditions and demand.</li> <li>Inflexible to changes in cost or market.</li> <li>May lead to inefficiencies within the company.</li> </ul> </td> </tr> </tbody> </table> <h3>3. Dynamic Pricing Strategy</h3> <p>Dynamic pricing strategy is also known as surge pricing, demand pricing, or time-based pricing. It involves adjusting prices in real time based on various factors such as market demand, competitor prices, and other external conditions.</p> <p>In my experience, this flexible approach helps maximize revenue and maintain competitiveness.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-3-20240911-6710311.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, dynamic pricing strategy"></p> <p>Hotels, airlines, event venues, and utility companies use dynamic pricing by applying algorithms that consider competitor pricing, demand, and other relevant factors. These algorithms allow companies to shift prices to match when and what the customer is willing to pay at the exact moment they’re ready to make a purchase.</p> <p>There is no single formula for dynamic pricing as it involves complex algorithms, but a basic version can be represented as:</p> <p><strong>Selling Price</strong> = Base Price + (Demand Factor × Competitor Price Factor)</p> <p>This formula simply tells you that the optimal price is a function of various factors, including demand, supply, competitor prices, time, and customer segments.</p> <p>A great example of a company that uses a <a href="https://www.uber.com/en-GB/blog/uber-dynamic-pricing/" rel="noopener" target="_blank">dynamic pricing model is Uber</a>. During peak hours or high-demand situations (e.g., Friday nights, bad weather), Uber’s algorithms monitor the number of ride requests, and if the demand exceeds the supply of available drivers, it temporarily increases the ride prices.</p> <h4>Dynamic Pricing Strategy in Marketing</h4> <p>Dynamic pricing can help keep your marketing plans on track. Your team can plan for promotions in advance and configure the pricing algorithm you use to launch the promotion price at the perfect time. You can even A/B test dynamic pricing in real time to maximize your profits.</p> <table> <tbody> <tr> <td colspan="1" rowspan="1"> <p><strong>Advantages</strong></p> </td> <td colspan="1" rowspan="1"> <p><strong>Disadvantages</strong></p> </td> </tr> <tr> <td colspan="1" rowspan="1"> <ul> <li>Allows you to capitalize on high-demand periods.</li> <li>Real-time pricing adjustments help you stay competitive.</li> <li>Helps in managing inventory by adjusting prices to influence demand.</li> </ul> </td> <td colspan="1" rowspan="1"> <ul> <li>Frequent price changes can confuse or frustrate customers.</li> <li>Requires sophisticated technology and data analytics.</li> <li>Competitors may also adopt dynamic pricing, leading to potential price wars.</li> </ul> </td> </tr> </tbody> </table> <div id="hs_cos_wrapper_widget_e0b44c91-fae5-44a8-aadc-3fbb7b6fe5de" class="hs_cos_wrapper hs_cos_wrapper_widget hs_cos_wrapper_type_module" style="" data-hs-cos-general-type="widget" data-hs-cos-type="module"> <section class="blog-fwcta" data-state="offer"> <div class="blog-fwcta-offer"> <div class="blog-fwcta-offer-content"> <div class="blog-fwcta-offer-img"> <img src="https://offers.hubspot.com/hubfs/Image%20Hackathon%20%E2%80%93%20Vertical%20(45).png" loading="lazy" alt=""> </div> <div class="blog-fwcta-offer-text"> <h3 class="blog-fwcta-offer-title">Free Sales Pricing Strategy Calculator</h3> <p class="blog-fwcta-offer-subtitle">Determine the best pricing strategy for your business with this free calculator and template.</p> <ul class="blog-fwcta-offer-value-prop-list"> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Cost-Plus Pricing </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Skimming Strategy </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Value-Based Pricing </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> And More! </li> </ul> <div class="blog-fwcta-offer-cta-container"><button class="blog-fwcta-form-initiation-button blog-fwcta-offer-cta">Get Your Free Template</button> <a class="blog-fwcta-offer-cta -learn-more-text" href="https://offers.hubspot.com/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank"> Learn more <svg class="blog-fwcta-offer-external-link cl-icon cl-textLink-icon -large" aria-label="Link opens in a new window"> <use href="#cl-icon-external-link" /> </svg> <span class="visually-hidden"></span> </a> <a class="blog-fwcta-offer-cta -form-text" href="https://offers.hubspot.com/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank"> Get Your Free Template <span class="visually-hidden"></span> </a> </div> </div> </div> </div> <div class="blog-fwcta-form"> <div class="blog-fwcta-form-content"> <style>@keyframes msf-progress { 0% { transform: scaleX(0); opacity: 0; } 100% { transform: scaleX(1); opacity: 1; } } @keyframes msf-appear { 0% { scale: 0; } 100% { scale: 1; } } .msf-container { --rff-indicator-outline-color: var(--light-theme-background-01); --rff-indicator-incomplete-background-color: var(--cl-color-container-03); --rff-indicator-complete-background-color: var(--cl-color-success-01); --rff-indicator-incomplete-text-color: var(--cl-color-text-01); --rff-indicator-complete-text-color: var(--cl-color-text-on-color-01); --rff-indicator-incomplete-border-color: var(--cl-color-border-03); --rff-indicator-complete-border-color: transparent; margin: 0 auto; max-width: 720px; container-name: msf-container; container-type: inline-size; &.-dark { --rff-indicator-outline-color: var(--dark-theme-background-02); } } .msf-header { text-align: center; margin: 2em 0 0 0; } .msf-progress-bar { position: absolute; z-index: 0; top: 50%; left: 0; right: 0; transform: translateY(-50%) scaleX(0); opacity: 0; height: 2px; background-color: var(--light-theme-border-02); transform-origin: left; } .msf-container[data-show-steps='true'] .msf-progress-bar { animation: msf-progress 1s linear forwards; } .msf-progress-header { position: relative; max-width: 860px; margin: 1rem auto 2.5rem; } .msf-indicators { list-style: none; width: 100%; display: flex; justify-content: space-between; flex-direction: row; } .msf-indicator { position: relative; z-index: 1; display: flex; justify-content: center; align-items: center; width: 2rem; height: 2rem; color: var(--rff-indicator-incomplete-text-color); background-color: var(--rff-indicator-incomplete-background-color); border: 2px solid var(--rff-indicator-incomplete-border-color); border-radius: 50%; outline: 8px solid var(--rff-indicator-outline-color); scale: 0; transition: 0.3s background-color linear; font-size: var(--font-size-h6, 1rem); font-weight: var(--font-weight-h6, 500); line-height: var(--line-height-h6, 1.75); } .msf-indicator .cl-icon { display: none; } .msf-description { margin-bottom: 1.5rem; } .msf-container[data-show-steps='true'] .msf-indicator { animation: msf-appear 0.3s ease-out forwards; animation-delay: var(--delay); } .msf-indicator.complete, .msf-indicator.active { background-color: var(--rff-indicator-complete-background-color); color: var(--rff-indicator-complete-text-color); border-color: var(--rff-indicator-complete-border-color); } .msf-indicator.complete .cl-icon { height: 1rem; width: 1rem; position: absolute; fill: currentColor; display: flex; } .msf-indicator.complete > span { opacity: 0; /* effectively visually-hidden */ } .msf { --current-step: 1; position: relative; margin: 0 auto; max-width: 1080px; overflow: hidden; padding: 0.5rem; } .msf-list { display: flex; flex-direction: row; flex-wrap: nowrap; width: 100%; list-style: none; transform: translateX(calc(-100% * (var(--current-step) - 1))); transition: transform 0.35s ease-in-out; } .msf-step { width: 100%; min-width: 100%; display: flex; flex-direction: column; align-items: center; visibility: hidden; } .msf-step[data-active='true'] { visibility: visible; } .msf-step-fields { display: flex; flex-direction: column; } @container msf-container (width >= 600px) { .msf-step-fields { flex-direction: row; } } .msf-field + .msf-field { padding-top: 1.5rem; } @container msf-container (width >= 600px) { .msf-field + .msf-field { padding-left: 1.5rem; padding-top: 0; } } .msf-legal { max-height: 0; overflow: hidden; transition: max-height 0.5s ease-in; text-align: left; font-size: var(--font-size-small); line-height: var(--line-height-small); margin-top: 1.5rem; } .msf-legal > p { font-size: var(--font-size-small); line-height: var(--line-height-small); } .msf-navigation { position: relative; width: 100%; display: flex; align-items: center; justify-content: space-between; padding-top: 2rem; } .msf-next { position: relative; } .msf-submit { position: absolute; right: 0; visibility: hidden; } .msf[data-step='1'] .msf-previous { visibility: hidden; } .msf[data-last-step='true'] .msf-next { visibility: hidden; } .msf[data-last-step='true'] .msf-submit { visibility: visible; } .msf[data-last-step='true'] .msf-legal { max-height: 100vh; } /* Component library validation */ .msf .cl-input .cl-input-status { display: none; } .msf .cl-input.-invalid .cl-input-status { display: unset; } /* Loading states for CTAs */ .msf .cl-button { min-height: 41px; } .msf .cl-loading { position: absolute; display: none; top: 50%; left: 50%; transform: translate(-50%, -50%); } .msf-submit.loading > span, .msf-next.loading > span { visibility: hidden; } .msf-submit.loading > .cl-loading, .msf-next.loading > .cl-loading { display: block; } </style> <script id="rff-user-data" type="application/json" nonce="pVDyqOYx2udrOs6BTdiDIQ=="> { "firstName": "", "lastName": "", "email": "", "company": "", "website": "", "phone": "", "employees": "", "ipAddress": "8.222.208.146", "ipCountry": "sg", "partners": "", "customHiddenFields": [], "language": "en", "pageId": "9833550953" } </script> <div class="msf-container -light"> <div class="msf-header"> <div class="msf-progress-header"> <div class="msf-progress-bar" aria-hidden="true"></div> <ul class="msf-indicators" aria-label="Steps"></ul> </div><h2>Download Free</h2><p class="msf-description">All fields are required.</p></div> <form class="msf" data-theme="light" data-form-id="45afae4b-f2a7-4d63-b4bf-d8a4418bbcc1" data-response-type="inline" data-redirect-url="https://offers.hubspot.com/thank-you/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy " data-followup-email-id="" data-display-option="inline" data-step="1"> </form> </div> </div> </div> <div class="blog-fwcta-thank-you"> <div class="blog-fwcta-thank-you-content"> <div class="blog-fwcta-thank-you-img"> <img src="https://offers.hubspot.com/hubfs/Image%20Hackathon%20%E2%80%93%20Vertical%20(45).png" loading="lazy" alt=""> </div> <div class="blog-fwcta-offer-text"> <h3 class="blog-fwcta-thank-you-text">You're all set!</h3> <p class="blog-fwcta-thank-you-subtitle">Click this link to access this resource at any time.</p> <div class="blog-fwcta-thank-you-cta-container"> <a class="blog-fwcta-thank-you-cta" href="https://offers.hubspot.com/thank-you/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank" rel="noopener noreferrer">Download Now</a> </div> </div> </div> </div> </section> </div> <h3>4. High-Low Pricing Strategy</h3> <p>A <a href="https://blog.hubspot.com/sales/high-low-pricing-strategy" rel="noopener" target="_blank">high-low pricing strategy</a> occurs when a company initially sells a product at a high price but lowers that price when the product loses novelty or relevance.</p> <p>Discounts, clearance sections, and year-end sales are examples of high-low pricing in action, which is why this strategy may also be called a discount pricing strategy.</p> <p>This approach aims to capture different segments of the market, starting with customers willing to pay a premium and later attracting more price-sensitive shoppers as the price drops.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-4-20240911-9091776.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, high-low pricing strategy"></p> <p>High-low pricing is commonly used by retail firms that sell seasonal items or products that change often, such as clothing, decor, and furniture.</p> <p>For example, in 2023, Nike used the high-low pricing strategy for its <a href="https://www.nike.com/t/court-legacy-mens-shoe-Lswv5z/CU4150-002" rel="noopener" target="_blank">Court Legacy sneaker</a>. Initially, the shoe was sold at a high price to attract customers eager for the latest release.</p> <p>As demand decreased and new models came out, Nike lowered the price through promotions and discounts. This strategy helped Nike manage inventory and attract a broader customer base, including price-sensitive shoppers who waited for discounts.</p> <p>What makes a high/low pricing strategy appealing to sellers? Consumers enjoy anticipating sales and discounts, hence why Black Friday and other universal discount days are so popular.</p> <h4>High-Low Pricing Strategy in Marketing</h4> <p>If you want to keep the foot traffic steady in your stores year-round, a high-low pricing strategy can help. By evaluating the popularity of your products during particular periods throughout the year, you can leverage low pricing to increase sales during traditionally slow months.</p> <table> <tbody> <tr> <td colspan="1" rowspan="1"> <p><strong>Advantages</strong></p> </td> <td colspan="1" rowspan="1"> <p><strong>Disadvantages</strong></p> </td> </tr> <tr> <td colspan="1" rowspan="1"> <ul> <li>Helps clear out excess inventory.</li> <li>Attracts different customer segments over time.</li> <li>Allows for varied marketing campaigns, such as “limited-time offers” or “clearance sales,” to drive customer interest.</li> </ul> </td> <td colspan="1" rowspan="1"> <ul> <li>Lower prices reduce profit margins.</li> <li>Shoppers may delay purchases, waiting for discounts.</li> <li>Frequent discounts may lead customers to perceive the product as lower quality.</li> </ul> </td> </tr> </tbody> </table> <h3>5. Penetration Pricing Strategy</h3> <p><a href="https://blog.hubspot.com/sales/penetration-pricing?__" rel="noopener" target="_blank">Penetration pricing strategy</a> involves setting a low initial price for a new product to attract customers and gain market share quickly. Once the product gains traction, the price is gradually increased.</p> <p>In my experience, this pricing method works best for brand-new businesses looking for customers or for businesses that are breaking into an existing, competitive market. The goal is to entice customers away from competitors and build a substantial customer base, with the expectation that customers will remain loyal even after prices are increased.</p> <p>However, penetration pricing isn’t sustainable in the long run. It’s typically applied for a short time.</p> <p>For example, when Disney+ launched its streaming service, it offered subscriptions at a lower price compared to competitors like Netflix and Amazon Prime. This initial low price attracted millions of subscribers quickly.</p> <p>After building a strong subscriber base, Disney+ then increased its subscription prices in 2022 to improve profitability.</p> <h4>Penetration Pricing Strategy in Marketing</h4> <p>Penetration pricing, like freemium pricing, means you won't make money immediately. However, with a valuable product or service, you can increase prices over time and grow your business. Focus on marketing the value of your products, making price a secondary consideration.</p> <table> <tbody> <tr> <td colspan="1" rowspan="1"> <p><strong>Advantages</strong></p> </td> <td colspan="1" rowspan="1"> <p><strong>Disadvantages</strong></p> </td> </tr> <tr> <td colspan="1" rowspan="1"> <ul> <li>Helps in quickly gaining market share.</li> <li>Attracts price-sensitive customers and encourages them to switch from competitors.</li> <li>Creates buzz and increases brand visibility.</li> </ul> </td> <td colspan="1" rowspan="1"> <ul> <li>Initial low prices mean lower profit margins.</li> <li>Customers may expect low prices to continue.</li> <li>Requires significant financial resources to sustain low prices until market share is gained.</li> </ul> </td> </tr> </tbody> </table> <h3>6. Skimming Pricing Strategy</h3> <p>Skimming pricing strategy involves setting a high initial price for a new or innovative product to maximize revenue from early adopters. Over time, the price is gradually lowered to attract more price-sensitive customers.</p> <p>Skimming is different from high-low pricing in that prices are lowered gradually over time.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-5-20240911-9547609.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, skimming pricing strategy"></p> <p>Apple uses the skimming pricing strategy effectively. When they launch a new iPhone, it is priced at a premium to target customers willing to pay more for the latest technology and features.</p> <p>As newer models are introduced and initial demand decreases, Apple gradually reduces the price of the previous model. This approach helps them maximize revenue from early adopters and then attract more price-sensitive customers over time.</p> <p>A skimming pricing strategy helps recover sunk costs and sell products well beyond their novelty, but the strategy can also annoy consumers who bought at full price and attract competitors who recognize the “fake” pricing margin as prices are lowered.</p> <h4>Skimming Pricing Strategy in Marketing</h4> <p>Skimming pricing works well for products with different life cycle lengths. For products with a short life cycle, you can quickly maximize profits at the start. For those with longer life cycles, you can maintain higher prices for a longer period. This strategy allows you to manage marketing efforts effectively without constantly adjusting prices for all products.</p> <table> <tbody> <tr> <td colspan="1" rowspan="1"> <p><strong>Advantages</strong></p> </td> <td colspan="1" rowspan="1"> <p><strong>Disadvantages</strong></p> </td> </tr> <tr> <td colspan="1" rowspan="1"> <ul> <li>Captures high profits from early adopters.</li> <li>Helps recover research and development costs quickly.</li> <li>Targets different customer segments over time.</li> </ul> </td> <td colspan="1" rowspan="1"> <ul> <li>Competitors may enter the market with lower prices.</li> <li>Early buyers may feel alienated when prices drop.</li> <li>Initial high prices may limit the number of early adopters.</li> </ul> </td> </tr> </tbody> </table> <h3>7. Value-Based Pricing Strategy</h3> <p>Value-based pricing is a strategy where prices are set based on the perceived value of the product or service to the customer rather than on the cost of production or historical prices.</p> <p>This approach aims to maximize revenue by aligning the price with the value customers place on the offering.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-6-20240911-5918210.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, value-based pricing strategy"></p> <p>If used accurately, <a href="https://blog.hubspot.com/sales/value-based-pricing" rel="noopener" target="_blank">value-based pricing</a> can boost your customer sentiment and loyalty. I think it can also help you prioritize your customers in other facets of your business, like marketing and service.</p> <p>Tesla uses a value-based pricing strategy for its electric vehicles (EVs). This pricing reflects the perceived value of their innovative technology, sustainability, and brand prestige.</p> <p>For example, the Tesla Model S is priced higher than many other EVs and luxury cars due to its high performance and advanced features. Customers are willing to pay a premium for Tesla‘s cutting-edge technology and the brand’s reputation for innovation and environmental responsibility.</p> <div id="hs_cos_wrapper_widget_6ef461b9-aeaa-4dbd-82c1-b7d9ba477932" class="hs_cos_wrapper hs_cos_wrapper_widget hs_cos_wrapper_type_module" style="" data-hs-cos-general-type="widget" data-hs-cos-type="module"> <section class="blog-fwcta" data-state="offer"> <div class="blog-fwcta-offer"> <div class="blog-fwcta-offer-content"> <div class="blog-fwcta-offer-img"> <img src="https://offers.hubspot.com/hubfs/Image%20Hackathon%20%E2%80%93%20Vertical%20(45).png" loading="lazy" alt=""> </div> <div class="blog-fwcta-offer-text"> <h3 class="blog-fwcta-offer-title">Free Sales Pricing Strategy Calculator</h3> <p class="blog-fwcta-offer-subtitle">Determine the best pricing strategy for your business with this free calculator and template.</p> <ul class="blog-fwcta-offer-value-prop-list"> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Cost-Plus Pricing </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Skimming Strategy </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> Value-Based Pricing </li> <li class="blog-fwcta-offer-value-prop"> <svg class="blog-fwcta-offer-value-prop-icon cl-icon" role="presentation"> <use href="#cl-icon-check-circle"></use> </svg> And More! </li> </ul> <div class="blog-fwcta-offer-cta-container"><button class="blog-fwcta-form-initiation-button blog-fwcta-offer-cta">Get Your Free Template</button> <a class="blog-fwcta-offer-cta -learn-more-text" href="https://offers.hubspot.com/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank"> Learn more <svg class="blog-fwcta-offer-external-link cl-icon cl-textLink-icon -large" aria-label="Link opens in a new window"> <use href="#cl-icon-external-link" /> </svg> <span class="visually-hidden"></span> </a> <a class="blog-fwcta-offer-cta -form-text" href="https://offers.hubspot.com/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank"> Get Your Free Template <span class="visually-hidden"></span> </a> </div> </div> </div> </div> <div class="blog-fwcta-form"> <div class="blog-fwcta-form-content"> <style>@keyframes msf-progress { 0% { transform: scaleX(0); opacity: 0; } 100% { transform: scaleX(1); opacity: 1; } } @keyframes msf-appear { 0% { scale: 0; } 100% { scale: 1; } } .msf-container { --rff-indicator-outline-color: var(--light-theme-background-01); --rff-indicator-incomplete-background-color: var(--cl-color-container-03); --rff-indicator-complete-background-color: var(--cl-color-success-01); --rff-indicator-incomplete-text-color: var(--cl-color-text-01); --rff-indicator-complete-text-color: var(--cl-color-text-on-color-01); --rff-indicator-incomplete-border-color: var(--cl-color-border-03); --rff-indicator-complete-border-color: transparent; margin: 0 auto; max-width: 720px; container-name: msf-container; container-type: inline-size; &.-dark { --rff-indicator-outline-color: var(--dark-theme-background-02); } } .msf-header { text-align: center; margin: 2em 0 0 0; } .msf-progress-bar { position: absolute; z-index: 0; top: 50%; left: 0; right: 0; transform: translateY(-50%) scaleX(0); opacity: 0; height: 2px; background-color: var(--light-theme-border-02); transform-origin: left; } .msf-container[data-show-steps='true'] .msf-progress-bar { animation: msf-progress 1s linear forwards; } .msf-progress-header { position: relative; max-width: 860px; margin: 1rem auto 2.5rem; } .msf-indicators { list-style: none; width: 100%; display: flex; justify-content: space-between; flex-direction: row; } .msf-indicator { position: relative; z-index: 1; display: flex; justify-content: center; align-items: center; width: 2rem; height: 2rem; color: var(--rff-indicator-incomplete-text-color); background-color: var(--rff-indicator-incomplete-background-color); border: 2px solid var(--rff-indicator-incomplete-border-color); border-radius: 50%; outline: 8px solid var(--rff-indicator-outline-color); scale: 0; transition: 0.3s background-color linear; font-size: var(--font-size-h6, 1rem); font-weight: var(--font-weight-h6, 500); line-height: var(--line-height-h6, 1.75); } .msf-indicator .cl-icon { display: none; } .msf-description { margin-bottom: 1.5rem; } .msf-container[data-show-steps='true'] .msf-indicator { animation: msf-appear 0.3s ease-out forwards; animation-delay: var(--delay); } .msf-indicator.complete, .msf-indicator.active { background-color: var(--rff-indicator-complete-background-color); color: var(--rff-indicator-complete-text-color); border-color: var(--rff-indicator-complete-border-color); } .msf-indicator.complete .cl-icon { height: 1rem; width: 1rem; position: absolute; fill: currentColor; display: flex; } .msf-indicator.complete > span { opacity: 0; /* effectively visually-hidden */ } .msf { --current-step: 1; position: relative; margin: 0 auto; max-width: 1080px; overflow: hidden; padding: 0.5rem; } .msf-list { display: flex; flex-direction: row; flex-wrap: nowrap; width: 100%; list-style: none; transform: translateX(calc(-100% * (var(--current-step) - 1))); transition: transform 0.35s ease-in-out; } .msf-step { width: 100%; min-width: 100%; display: flex; flex-direction: column; align-items: center; visibility: hidden; } .msf-step[data-active='true'] { visibility: visible; } .msf-step-fields { display: flex; flex-direction: column; } @container msf-container (width >= 600px) { .msf-step-fields { flex-direction: row; } } .msf-field + .msf-field { padding-top: 1.5rem; } @container msf-container (width >= 600px) { .msf-field + .msf-field { padding-left: 1.5rem; padding-top: 0; } } .msf-legal { max-height: 0; overflow: hidden; transition: max-height 0.5s ease-in; text-align: left; font-size: var(--font-size-small); line-height: var(--line-height-small); margin-top: 1.5rem; } .msf-legal > p { font-size: var(--font-size-small); line-height: var(--line-height-small); } .msf-navigation { position: relative; width: 100%; display: flex; align-items: center; justify-content: space-between; padding-top: 2rem; } .msf-next { position: relative; } .msf-submit { position: absolute; right: 0; visibility: hidden; } .msf[data-step='1'] .msf-previous { visibility: hidden; } .msf[data-last-step='true'] .msf-next { visibility: hidden; } .msf[data-last-step='true'] .msf-submit { visibility: visible; } .msf[data-last-step='true'] .msf-legal { max-height: 100vh; } /* Component library validation */ .msf .cl-input .cl-input-status { display: none; } .msf .cl-input.-invalid .cl-input-status { display: unset; } /* Loading states for CTAs */ .msf .cl-button { min-height: 41px; } .msf .cl-loading { position: absolute; display: none; top: 50%; left: 50%; transform: translate(-50%, -50%); } .msf-submit.loading > span, .msf-next.loading > span { visibility: hidden; } .msf-submit.loading > .cl-loading, .msf-next.loading > .cl-loading { display: block; } </style> <script id="rff-user-data" type="application/json" nonce="pVDyqOYx2udrOs6BTdiDIQ=="> { "firstName": "", "lastName": "", "email": "", "company": "", "website": "", "phone": "", "employees": "", "ipAddress": "8.222.208.146", "ipCountry": "sg", "partners": "", "customHiddenFields": [], "language": "en", "pageId": "9833550953" } </script> <div class="msf-container -light"> <div class="msf-header"> <div class="msf-progress-header"> <div class="msf-progress-bar" aria-hidden="true"></div> <ul class="msf-indicators" aria-label="Steps"></ul> </div><h2>Download Free</h2><p class="msf-description">All fields are required.</p></div> <form class="msf" data-theme="light" data-form-id="45afae4b-f2a7-4d63-b4bf-d8a4418bbcc1" data-response-type="inline" data-redirect-url="https://offers.hubspot.com/thank-you/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy " data-followup-email-id="" data-display-option="inline" data-step="1"> </form> </div> </div> </div> <div class="blog-fwcta-thank-you"> <div class="blog-fwcta-thank-you-content"> <div class="blog-fwcta-thank-you-img"> <img src="https://offers.hubspot.com/hubfs/Image%20Hackathon%20%E2%80%93%20Vertical%20(45).png" loading="lazy" alt=""> </div> <div class="blog-fwcta-offer-text"> <h3 class="blog-fwcta-thank-you-text">You're all set!</h3> <p class="blog-fwcta-thank-you-subtitle">Click this link to access this resource at any time.</p> <div class="blog-fwcta-thank-you-cta-container"> <a class="blog-fwcta-thank-you-cta" href="https://offers.hubspot.com/thank-you/sales-pricing-calculator?hubs_post-cta=fwcta&hubs_post=blog.hubspot.com/sales/pricing-strategy" target="_blank" rel="noopener noreferrer">Download Now</a> </div> </div> </div> </div> </section> </div> <h4>Value-Based Pricing Strategy in Marketing</h4> <p>When marketing to customers, I recommend focusing on value to strengthen demand for your products and services. Ensure your pricing reflects what different audiences are willing to pay without using criteria that could cause issues.</p> <table> <tbody> <tr> <td colspan="1" rowspan="1"> <p><strong>Advantages</strong></p> </td> <td colspan="1" rowspan="1"> <p><strong>Disadvantages</strong></p> </td> </tr> <tr> <td colspan="1" rowspan="1"> <ul> <li>Builds stronger customer relationships.</li> <li>Can command higher prices if the product is perceived to offer significant value.</li> <li>Helps differentiate the product from competitors based on value rather than price.</li> </ul> </td> <td colspan="1" rowspan="1"> <ul> <li>Incorrectly assessing the perceived value can lead to pricing too high or too low.</li> <li>Prices may need frequent adjustments based on changing customer perceptions.</li> <li>Requires extensive market research and understanding of customer perceptions.</li> </ul> </td> </tr> </tbody> </table> <h3>8. Psychological Pricing Strategy</h3> <p>Psychological pricing is what it sounds like — it targets human psychology to boost your sales.</p> <p>For example, according to the "<a href="https://w4.stern.nyu.edu/sternbusiness/fall_2005/pennySaved.html" rel="noopener" target="_blank">9-digit effect</a>,“ even though a product that costs $99.99 is essentially $100, customers may see this as a good deal simply because of the ”9" in the price.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-7-20240911-7525256.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, psychological pricing strategy"></p> <p>Another way to use psychological pricing would be to <a href="https://www.wsj.com/articles/BL-232B-784" rel="noopener" target="_blank">place a more expensive item</a> directly next to (either in-store or online) the one you're most focused on selling. Or offer a “buy one, get one 50% off (or free)” deal that makes customers feel as though the circumstances are too good to pass up.</p> <p>Lastly, changing the font, size, and color of your pricing information on and around your products has also been <a href="https://production.wordpress.uconn.edu/businessmarketing/wp-content/uploads/sites/724/2014/08/size-does-matter.pdf" rel="noopener" target="_blank">proven to boost sales</a> in various instances.</p> <h4>Psychological Pricing Strategy in Marketing</h4> <p>Psychological pricing requires a deep understanding of your target market to be effective. If your customers value discounts and coupons, emphasize these in your marketing to meet their desire to save money.</p> <p>On the other hand, if quality is more important to your audience, the lowest price might not attract them. Your pricing and marketing should align with what motivates your customers to pay a certain price for a product.</p> <table> <tbody> <tr> <td colspan="1" rowspan="1"> <p><strong>Advantages</strong></p> </td> <td colspan="1" rowspan="1"> <p><strong>Disadvantages</strong></p> </td> </tr> <tr> <td colspan="1" rowspan="1"> <ul> <li>Makes products appear more affordable.</li> <li>Helps consumers make quicker decisions by presenting prices that seem lower.</li> <li>Differentiates products in a crowded market.</li> </ul> </td> <td colspan="1" rowspan="1"> <ul> <li>If overused, consumers may feel manipulated.</li> <li>May not be effective in all markets or with all customer segments.</li> </ul> </td> </tr> </tbody> </table> <h3>9. Geographic Pricing Strategy</h3> <p>Geographic pricing strategy involves setting different prices for products or services based on the geographic location of the customer.</p> <p>This strategy may be used if a customer from another country is making a purchase or if there are disparities in factors like the economy or wages (from the location in which you're selling a good to the location of the person it is being sold to).</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-8-20240911-7827506.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, geographic pricing strategy"></p> <p>For example, <a href="https://www.visualcapitalist.com/cp/mapped-how-much-netflix-costs-in-every-country/" rel="noopener" target="_blank">Netflix uses geographic pricing</a> to adjust subscription fees based on the region. A standard Netflix subscription costs $15.49 per month in the United States but ₹ $499 per month (about $6.50) in India to account for differences in purchasing power and local market competition.</p> <h4>Geographic Pricing Strategy in Marketing</h4> <p>Marketing a geographically priced product is easy with paid social media ads. You can target specific zip codes, cities, or regions at a low cost with precise results. Even if customers travel or move, your pricing model stays consistent, helping you manage marketing costs.</p> <table> <tbody> <tr> <td colspan="1" rowspan="1"> <p><strong>Advantages</strong></p> </td> <td colspan="1" rowspan="1"> <p><strong>Disadvantages</strong></p> </td> </tr> <tr> <td colspan="1" rowspan="1"> <ul> <li>Allows businesses to tailor prices to local market conditions.</li> <li>Helps cover additional costs such as shipping and local taxes.</li> <li>Can enhance the perceived value of products in certain regions.</li> </ul> </td> <td colspan="1" rowspan="1"> <ul> <li>Must comply with local laws and regulations.</li> <li>Customers may perceive price differences as unfair.</li> <li>Managing different prices for different regions can complicate accounting and bookkeeping.</li> </ul> </td> </tr> </tbody> </table> <a id="pricing-models" data-hs-anchor="true"></a> <h2>Pricing Models</h2> <p>While your company’s pricing strategy may determine how you set prices for offerings <em>overall</em>, pricing models help you implement the broader strategy.</p> <p>Below, I will take you through some popular pricing models:</p> <h3>1. Freemium Pricing</h3> <p>A combination of the words “free” and “premium,” <a href="https://blog.hubspot.com/service/freemium?" rel="noopener" target="_blank">freemium pricing</a> is when companies offer a basic version of their product, hoping that users will eventually pay to upgrade or access more features.</p> <p>Unlike cost-plus, freemium is a pricing model commonly used by SaaS and other software companies. They choose this model because free trials and limited memberships offer a peek into a software’s full functionality — and also build trust with a potential customer before purchase.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-9-20240911-2598520.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, freemium pricing strategy"></p> <p>With freemium, a company’s prices must be a function of the perceived value of their products.</p> <p>For example, companies that offer a free version of their software can’t ask users to pay $100 to transition to the paid version. Prices must present a low barrier to entry and grow incrementally as customers are offered more features and benefits.</p> <p>An example of a brand using this model is Dropbox. It attracts a large user base and builds brand awareness through its robust free tier. As users grow increasingly reliant on the service and need additional storage or features, their likelihood of upgrading to paid plans increases.</p> <h4>Freemium Pricing in Marketing</h4> <p>Freemium pricing may not make your business a lot of money on the initial acquisition of a customer, but it gives you access to the customer which is just as valuable. With access to their email inboxes, phone number, and any other contact information you gather in exchange for the free product, you can nurture the customer into a brand loyal advocate with a <a href="https://blog.hubspot.com/service/how-to-calculate-customer-lifetime-value?_" rel="noopener" target="_blank">worthwhile LTV</a>.</p> <h3>2. Premium Pricing</h3> <p>Premium pricing, also known as prestige pricing or luxury pricing, is a strategy where a product is priced higher than competitors to create an impression of superior quality and exclusivity.</p> <p>This model leverages the perception that higher prices signify better quality, drawing in consumers who are willing to pay more for what they see as a premium product or service. The strategy involves marketing the product as having limited availability or unique features that competitors cannot easily replicate.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-10-20240911-4429347.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, premium pricing strategy"></p> <p>Prestige pricing is a direct <a href="https://blog.hubspot.com/marketing/brand-awareness?" rel="noopener" target="_blank">function of brand awareness</a> and brand perception. Brands that apply this pricing method are known for providing value and status through their products — which is why they’re priced higher than other competitors.</p> <p>For example, <a href="https://www.samuelsonsdiamonds.com/insights/5-reasons-why-rolex-watches-are-so-expensive/" rel="noopener" target="_blank">Rolex sets its prices much higher</a> than other watchmakers. It relies on a strong reputation for exceptional craftsmanship and exclusivity. Rolex’s brand image and the perceived quality attract customers who value prestige and superior workmanship.</p> <h4>Premium Pricing in Marketing</h4> <p>Premium pricing is quite dependent upon the perception of your product within the market. There are a few ways to market your product in order to influence a premium perception of it including using influencers, controlling supply, and driving up demand.</p> <h3><strong>3. Hourly Pricing</strong></h3> <p>Hourly pricing, also known as rate-based pricing, is commonly used by consultants, freelancers, contractors, and other individuals or laborers who provide business services.</p> <p>Hourly pricing is essentially trading time for money. Some clients are hesitant to honor this pricing strategy as it can reward labor instead of efficiency.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-11-20240911-7822737.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, hourly pricing strategy"></p> <h4><strong>Hourly Pricing in Marketing</strong></h4> <p>For businesses that handle quick, high-volume projects, hourly pricing can incentivize customers to choose your services. Breaking down prices into hourly chunks allows customers to decide based on a lower price point, rather than needing to allocate a larger budget for an expensive project-based commitment.</p> <h3><strong>4. Bundle Pricing</strong></h3> <p>Bundle pricing is when you offer (or “bundle”) <a href="https://blog.hubspot.com/sales/bundle-pricing%23:" rel="noopener" target="_blank">two or more complementary products</a> or services together and sell them for a single price. You may choose to sell your bundled products or services only as part of a bundle, or sell them as both components of bundles and individual products.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-12-20240911-6636842.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, bundle pricing strategy "></p> <p>For example, Amazon frequently offers bundle deals where customers can buy related items together at a discount. For example, buying a camera with accessories like lenses, tripods, and memory cards at a bundled price.</p> <h4>Bundle Pricing in Marketing</h4> <p>In my experience, marketing bundle deals can help you sell more products than you would otherwise sell individually. It’s a smart way to <a href="https://blog.hubspot.com/sales/cross-selling?" rel="noopener" target="_blank">upsell and cross-sell</a> your offerings in a way that is beneficial for the customer and your revenue goals.</p> <h3>5. Project-Based Pricing</h3> <p>Project-based pricing is the opposite of hourly pricing — this approach charges a flat fee per project instead of a direct exchange of money for time. It is also used by consultants, freelancers, contractors, and other individuals or laborers who provide business services.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-13-20240911-6187081.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, project-based pricing strategy"></p> <p>Project-based pricing may be estimated based on the value of the project deliverables. Those who choose this pricing model may also create a flat fee from the estimated time of the project.</p> <h4><strong>Project-Based Pricing in Marketing</strong></h4> <p>Highlighting the benefits of working with your business can make project-based pricing more attractive. Although the cost may be high, the one-time investment is worthwhile. Clients will appreciate knowing they can work with you until the project is completed, rather than being limited by a set number of hours.</p> <h3><strong>6. Subscription Pricing</strong></h3> <p><a href="https://blog.hubspot.com/sales/subscription-pricing" rel="noopener" target="_blank">Subscription pricing</a> is a common pricing model at SaaS companies, online retailers, and even agencies that offer subscription packages for their services.</p> <p>Whether you offer flat-rate subscriptions or <a href="https://blog.hubspot.com/sales/tiered-pricing" rel="noopener" target="_blank">tiered subscriptions,</a> the benefits of this model are endless. For one, you have all but guaranteed <a href="https://blog.hubspot.com/sales/monthly-recurring-revenue" rel="noopener" target="_blank">monthly recurring revenue (MRR)</a> and yearly recurring revenue. That makes it simpler to calculate your profits on a monthly basis. It also often leads to higher <a href="https://blog.hubspot.com/service/how-to-calculate-customer-lifetime-value" rel="noopener" target="_blank">customer lifetime values</a>.</p> <p>The one thing to be wary of when it comes to subscription pricing is the high potential for <a href="https://blog.hubspot.com/service/what-is-customer-churn?" rel="noopener" target="_blank">customer churn</a>. People cancel subscriptions all the time, so it's essential to have a <a href="https://blog.hubspot.com/service/customer-retention-strategies?" rel="noopener" target="_blank">customer retention strategy</a> in place to ensure clients keep their subscriptions active.</p> <h4><strong>Subscription Pricing in Marketing</strong></h4> <p>When marketing your subscription products, I suggest you create <a href="https://blog.hubspot.com/marketing/buyer-persona-research?" rel="noopener" target="_blank">buyer personas</a> for each tier. That way, you know which features to include and what will appeal to each buyer. A general subscription that appeals to everyone won't pull in anyone.</p> <p>Even Amazon, which offers flat-rate pricing for its Prime subscription, includes a membership for students. That allows them to market the original Prime more effectively by creating a sense of differentiation.</p> <p>Now, let’s discuss how to build a pricing strategy of your own liking.</p> <a id="how-to-create-a-pricing-strategy" data-hs-anchor="true"></a> <h2>How to Create a Pricing Strategy</h2> <h3>Step 1: Evaluate pricing potential.</h3> <p>To create a pricing strategy, you need to understand your product’s unique selling points (USPs).</p> <p>These are the features or benefits that make your product stand out from competitors. Identifying and articulating these USPs helps in justifying a higher price point.</p> <p>Next, gauge customer perception. Conduct surveys, focus groups, or interviews to learn how potential customers perceive the value of your product or service.</p> <p>Understand what features they value the most and how much they are willing to pay for them. This information is crucial in setting a price that aligns with customer expectations.</p> <p>Additionally, assess market demand. I recommend using <a href="https://blog.hubspot.com/marketing/market-research-buyers-journey-guide" rel="noopener" target="_blank">market research tools</a> to analyze the demand for your product. Look at trends, market size, and growth potential. High demand can often support higher pricing, while lower demand might require competitive pricing to attract customers.</p> <h3>Step 2: Research your target market.</h3> <p>Understanding your target market is essential for setting the right price. Ensure to analyze your potential customer’s age, gender, income level, and other relevant characteristics. Understanding these characteristics helps tailor your pricing to their financial capabilities and preferences.</p> <p>In my experience, knowing what motivates your customers and their buying behaviors can provide insights into how much they are willing to spend and what they value most in a product or service.</p> <p>Once you have enough data, divide your market into segments based on demographics, psychographics, and behaviors. This will help you tailor your pricing strategy to your market needs.</p> <h3>Step 3: Research competitor pricing.</h3> <p>Understanding how competitors price their products helps you make informed decisions to enhance competitiveness and profitability.</p> <p>You’ll have to decide between two main choices when you see the price difference for the same product or service:</p> <ul> <li><strong>Beat your competitors’ prices. </strong>If a competitor is charging more for the same offering as your brand, then make the price more affordable.</li> <li><strong>Beat your competitors’ value.</strong> Also known as <a href="https://blog.hubspot.com/sales/value-based-pricing?_" rel="noopener" target="_blank">value-based pricing</a>, you can potentially price your offering higher than your competitors if the value provided to the customer is greater.</li> </ul> <p>To see the competition’s full product or service offering, conduct a <a href="https://blog.hubspot.com/marketing/competitive-analysis-kit" rel="noopener" target="_blank">full competitive analysis</a>. Collect data on their pricing structures, including base prices, discounts, and special offers. Analyze the value they provide at these prices, such as product quality, customer service, and additional features.</p> <p>Compare this with your offerings to understand your position. This will help you to identify gaps or opportunities to differentiate your pricing.</p> <h3>Step 4: Analyze historical data.</h3> <p>Analyzing historical data provides insights into past performance and helps predict future trends.</p> <p>Start by reviewing your sales data to identify patterns, such as peak selling periods and successful price points.</p> <p>Also, assess how market changes, like economic shifts or new competitors, have impacted sales. This historical perspective allows you to make data-driven decisions, anticipate customer reactions, and adjust prices strategically.</p> <h3>Step 5: Strike a balance between value and business goals.</h3> <p>When developing your pricing strategy, you want to make sure the price is good for your bottom line and your buyer personas. This compromise will better help your business and customer pool, with the intentions of:</p> <ul> <li>Increasing profitability.</li> <li>Improving cash flow.</li> <li><a href="https://blog.hubspot.com/marketing/market-penetration" rel="noopener" target="_blank">Market penetration</a>.</li> <li>Expanding market share.</li> <li>Increasing lead conversion.</li> </ul> <p>To do this, you need to understand the value your product or service provides to customers and set a price that reflects this value. At the same time, you must calculate the necessary profit margins to cover costs and ensure business growth.</p> <p>This balance helps maintain customer satisfaction and foster loyalty while still supporting sustainable profitability.</p> <h3>Step 6: Choose a pricing strategy.</h3> <p>After carefully considering all the factors discussed, it's time to select the optimal pricing model for your business. The ideal strategy should:</p> <ul> <li>Accurately reflect the value you deliver to customers.</li> <li>Help you achieve your revenue goals.</li> <li>Maintain competitiveness in the market.</li> <li>Align with your overall business strategy and positioning.</li> <li>Support your long-term objectives.</li> </ul> <p>Remember that pricing is not a one-time decision. Stay flexible and be prepared to make adjustments as market conditions shift and customer perceptions change over time.</p> <h3>Step 7: Test and refine.</h3> <p>Your pricing strategy should be flexible. So, I recommend you regularly review and refine it through continuous experimentation and A/B testing.</p> <p>For instance, you can test different price points over a set time period to evaluate their impact on sales and profitability. This way, you can make data-driven adjustments to optimize your pricing strategy.</p> <p>This will ensure it remains effective and aligned with both market conditions and customer expectations.</p> <p>Now that we’ve gone over how to create a pricing strategy, let’s discuss how to apply these steps to different businesses and industries.</p> <a id="pricing-models-based-on-industry-or-business" data-hs-anchor="true"></a> <h2>Pricing Models Based on Industry or Business</h2> <p>Not every pricing strategy is applicable to every business. Some strategies are better suited for physical products, whereas others work best for SaaS companies. Here are examples of some common pricing models based on industry and business.</p> <h3><strong>Product Pricing Model</strong></h3> <p>Unlike digital products or services, physical products incur hard costs (like shipping, production, and storage) that can influence pricing. A product pricing strategy should consider these costs and set a price that maximizes profit, supports research and development, and stands up against competitors.</p> <p><strong>Pro tip:</strong> I recommend using these pricing strategies when pricing physical products: cost-plus pricing, competitive pricing, prestige pricing, and value-based pricing.</p> <h3><strong>Digital Product Pricing Model</strong></h3> <p>Digital products, like software, online courses, and digital books, require a different approach to pricing because there’s no tangible offering or unit economics (production cost) involved. Instead, prices should reflect your brand, industry, and overall value of your product.</p> <p><strong>Pro tip: </strong>I recommend using these pricing strategies when pricing digital products: competition-based pricing, freemium pricing, and value-based pricing.</p> <h3><strong>Restaurant Pricing Model</strong></h3> <p>Restaurant pricing is unique in that physical costs, overhead costs, and service costs are all involved. You must also consider your customer base, overall market trends for your location and cuisine, and the cost of food — as all of these can fluctuate.</p> <p><strong>Pro tip: </strong>I recommend using these pricing strategies when pricing at restaurants: cost-plus pricing, premium pricing, and value-based pricing.</p> <h3><strong>Event Pricing Model</strong></h3> <p>Events can’t be accurately measured by production cost (not unlike the digital products we discussed above). Instead, event value is determined by the cost of marketing and organizing the event as well as the speakers, entertainers, networking, and the overall experience — and the ticket prices should reflect these factors.</p> <p><strong>Pro tip: </strong>I recommend using these pricing strategies when pricing live events: competition-based pricing, dynamic pricing, and value-based pricing.</p> <h3><strong>Services Pricing Model</strong></h3> <p>Business services can be hard to price due to their intangibility and lack of direct production cost. Much of the service value comes from the service provider’s ability to deliver and the assumed caliber of their work. Freelancers and contractors, in particular, must adhere to a services pricing strategy.</p> <p><strong>Pro tip: </strong>I recommend using these pricing strategies when pricing services: hourly pricing, project-based pricing, and value-based pricing.</p> <h3><strong>Nonprofit Pricing Model</strong></h3> <p>Nonprofits need pricing strategies, too — a pricing strategy can help nonprofits optimize all processes so they’re successful over an extended period of time.</p> <p>A nonprofit pricing strategy should consider current spending and expenses, the breakeven number for their operation, ideal profit margin, and how the strategy will be communicated to volunteers, licensees, and anyone else who needs to be informed. A nonprofit pricing strategy is unique because it often calls for a combination of elements that come from a few pricing strategies.</p> <p><strong>Pro tip:</strong> I recommend using these pricing strategies when pricing for nonprofits: competitive pricing, cost-plus pricing, demand pricing, and hourly pricing.</p> <h3><strong>Education Pricing Model</strong></h3> <p>Education encompasses a wide range of costs that are important to consider depending on the level of education, private or public education, and education program/discipline.</p> <p>Specific costs to consider in an education pricing strategy are tuition, scholarships, and additional fees (labs, books, housing, meals, etc.). Other important factors to note are competition among similar schools, demand (number of student applications), number and costs of professors/ teachers, and attendance rates.</p> <p><strong>Pro tip:</strong> I recommend using these pricing strategies when pricing education: competitive pricing, cost-based pricing, and premium pricing.</p> <h3><strong>Real Estate Pricing Model</strong></h3> <p>Real estate encompasses home value estimates, market competition, housing demand, and cost of living. There are other factors that play a role in real estate pricing models including potential bidding wars, housing estimates and benchmarks (which are available through real estate agents but also through free online resources like <a href="https://www.zillow.com/" rel="noopener" target="_blank">Zillow</a>), and seasonal shifts in the real estate market.</p> <p><strong>Pro tip:</strong> I recommend using these pricing strategies when pricing real estate: competitive pricing, dynamic pricing, premium pricing, and value-based pricing.</p> <h3><strong>Agency Pricing Model</strong></h3> <p>Agency pricing models impact your profitability, retention rates, customer happiness, and how you market and sell your agency. When developing and evolving your agency’s pricing model, it’s important to take into consideration different ways to optimize it so you can determine the best way to boost the business's profits.</p> <p><strong>Pro tip: </strong>I recommend using these pricing strategies when pricing agencies: hourly pricing, project-based pricing, and value-based pricing.</p> <h3><strong>Manufacturing Pricing Model</strong></h3> <p>The manufacturing industry is complex — there are a number of moving parts and your manufacturing pricing model is no different. Consider product evolution, demand, production cost, sale price, unit sales volume, and any other costs related to your process and product. Another key part to a manufacturing pricing strategy is understanding the maximum amount the market will pay for your specific product to allow for the greatest profit.</p> <p><strong>Pro tip: </strong>I recommend using these pricing strategies when pricing manufacturing: competitive pricing, cost-plus pricing, and value-based pricing.</p> <h3><strong>Ecommerce Pricing Model</strong></h3> <p>Ecommerce pricing models are how you determine the price at which you’ll sell your online products and what it’ll cost you to do so. This means that you must think about what your customers are willing to pay for your online products and what those products cost you to purchase and/or create.</p> <p>You might also factor in your online campaigns to promote these products, as well as how easy it is for your customers to find products similar to yours on the ecommerce sites of your competitors.</p> <p><strong>Pro tip: </strong>I recommend using these pricing strategies for ecommerce: competitive pricing, cost-based pricing, dynamic pricing, freemium pricing, penetration pricing, and value-based pricing.</p> <a id="pricing-strategy-examples" data-hs-anchor="true"></a> <div id="hs_cos_wrapper_widget_f07fd06b-9c20-4bf2-b7c9-5a56e2092100" class="hs_cos_wrapper hs_cos_wrapper_widget hs_cos_wrapper_type_module" style="" data-hs-cos-general-type="widget" data-hs-cos-type="module"> <section id="widget_f07fd06b-9c20-4bf2-b7c9-5a56e2092100" class="csol-section csol-featured-snippet -blog -white -padding-top-xs -padding-bottom-xs"> <div class="csol-section-wrapper"> <div class="csol-featured-snippet-container -light"> <div class="csol-featured-snippet-header"> <img src="https://53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/component-library/sprocket.svg" alt="" class="" data-csol-svg-source="https://53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/component-library/sprocket.svg" width="48" height="48" loading="lazy"><h2 class="csol-featured-snippet-heading">Pricing Strategy Examples</h2></div> <ol class="csol-featured-snippet-list-items"> <li> <span>Dynamic Pricing Strategy: Chicago Cubs </span> </li> <li> <span>Freemium Pricing Strategy: HubSpot </span> </li> <li> <span>Penetration Pricing Strategy: Netflix </span> </li> <li> <span>Premium Pricing: AWAY </span> </li> <li> <span>Competitive Pricing Strategy: Shopify </span> </li> <li> <span>Project-Based Pricing Strategy: White Label Agency</span> </li> <li> <span>Value-Based Pricing Strategy: INBOUND </span> </li> <li> <span>Bundle Pricing: Adobe Creative Cloud</span> </li> <li> <span>Geographic Pricing: Gasoline</span> </li> </ol> </div> </div> </section> </div> <p>Pricing models can be hard to visualize. Below, we’ve pulled together a list of examples of pricing strategies as they’ve been applied to everyday situations or businesses.</p> <h3><strong>1. Dynamic Pricing Strategy:</strong> <strong><a href="https://www.mlb.com/cubs/tickets/single-game-tickets?affiliateId%3Dtdl-Chicago_Cubs-tickets-Chicago_Cubs:_Tickets:_Chicago_Cubs_Tickets-na-x0-Desktop-Landscape" rel="noopener" target="_blank">Chicago Cubs</a></strong></h3> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-14-20240911-1542826.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, Cubs dynamic pricing"></p> <p>I live in Chicago, five blocks away from Wrigley Field, and my friends and I love going to Cubs games. Finding tickets is always interesting, though, because every time we check prices, they’ve fluctuated a bit from the last time. Purchasing tickets six weeks in advance is always a different process than purchasing them six days prior — and even more box pricing at the gate.</p> <p>This is an example of dynamic pricing — pricing that varies based on market and customer demand. Prices for Cubs games are always more expensive on holidays, too, when more people are visiting the city and are likely to go to a game.</p> <p>(Another prime example of dynamic pricing is <a href="https://www.inbound.com/" rel="noopener" target="_blank">INBOUND</a>, for which tickets get more expensive as the event nears.)</p> <p><strong>Best for: </strong>Time-sensitive events, sales, or promotions are great opportunities for implementing dynamic pricing.</p> <h3><strong>2. Freemium Pricing Strategy:</strong> <strong><a href="https://www.hubspot.com/pricing/crm?_ga%3D2.91270618.1707373400.1621265930-790187191.1621265930" rel="noopener" target="_blank">HubSpot</a></strong></h3> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-15-20240911-2813104.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, HubSpot freemium pricing"></p> <p>HubSpot is an example of freemium pricing at work. We offer a free version of the <a href="https://www.hubspot.com/products/crm" rel="noopener" target="_blank">CRM</a> for scaling businesses as well as paid plans for businesses using the CRM platform that need a<a href="https://www.hubspot.com/products/get-started" rel="noopener" target="_blank"> wider range of features</a>.</p> <p>Moreover, within those marketing tools, HubSpot provides limited access to specific features. This type of pricing strategy allows customers to acquaint themselves with HubSpot and for HubSpot to establish trust with customers before asking them to pay for additional access.</p> <p><strong>What I like: </strong>Freemium pricing works super well for digital products because it gives customers a taste of the value you offer before committing.</p> <h3><strong>3. Penetration Pricing Strategy:</strong> <strong><a href="https://www.netflix.com/" rel="noopener" target="_blank">Netflix</a></strong></h3> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-16-20240911-7581130.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, Netflix penetration pricing"></p> <p style="text-align: center; font-size: 12px;"><em><a href="https://www.cnbc.com/select/netflix-price-hike-how-to-save-maximize-subscription/">Image Source</a></em></p> <p><a href="https://www.netflix.com/" rel="noopener" target="_blank">Netflix</a> is another classic example of penetration pricing: entering the market at a low price (does anyone remember when it was $7.99?) and increasing prices over time. Since I joined a couple of years ago, I’ve seen a few price increase notices come through my own inbox.</p> <p>Despite their increases, Netflix continues to retain — and gain — customers. Sure, Netflix only increases their subscription fee by $1 or $2 each time, but they do so consistently. Who knows what the fees will be in five or ten years?</p> <p><strong>Pro tip: </strong>If you go with penetration pricing, be sure to be transparent about when the lower pricing changes so customers don’t churn as soon as you up the price on them. Also, be sure the value you provide is worth the higher price to customers.</p> <h3><strong>4. Premium Pricing:</strong> <strong><a href="https://www.awaytravel.com/shop/suitcases" rel="noopener" target="_blank">AWAY</a></strong></h3> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-17-20240911-5790471.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, AWAY premium pricing"></p> <p>There are lots of examples of premium pricing strategies … Rolex, Tesla, Nike — you name it. One that I thought of immediately was <a href="https://www.awaytravel.com/shop/suitcases" rel="noopener" target="_blank">AWAY luggage</a>.</p> <p>Does luggage need to be almost $500? I’d say no, especially since I recently purchased a two-piece Samsonite set for one-third the cost. However, AWAY has still been very successful even though they charge a high price for their luggage. This is because when you purchase AWAY, you’re purchasing an experience. The unique branding and the image AWAY portrays for customers make the value of the luggage match the purchase price.</p> <p><strong>Best for: </strong>Premium pricing is best for premium products or services, so be sure your offer suits your price.</p> <h3><strong>5. Competitive Pricing Strategy:</strong> <strong><a href="https://www.shopify.com/" rel="noopener" target="_blank">Shopify</a></strong></h3> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-18-20240911-3323956.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, Shopify plans"></p> <p><a href="https://www.shopify.com/" rel="noopener" target="_blank">Shopify</a> is an ecommerce platform that helps businesses manage their stores and sell their products online. Shopify — which <a href="https://ecosystem.hubspot.com/marketplace/apps/marketing/ecommerce/shopify?_ga%3D2.14806390.1707373400.1621265930-790187191.1621265930" rel="noopener" target="_blank">integrates with HubSpot</a> — has a competitive pricing strategy.</p> <p>There are a number of ecommerce software options on the market today. However, Shopify differentiates itself by the features it provides users and the price at which it offers them. They have four thoughtfully-priced versions of their product for customers to choose from, and they have a number of customizable and flexible features.</p> <p><strong>What I like: </strong>With these extensive options tailored to any ecommerce business's needs, the cost of Shopify is highly competitive and is often the same as or lower than other ecommerce platforms on the market today.</p> <h3>6. Project-Based Pricing Strategy: <a href="https://www.whitelabelagency.co/" rel="noopener" target="_blank">White Label Agency</a></h3> <p>Anyone who's been involved in building a website knows how complex and costly it can be. When I needed a new website for my business, I found that the project-based fees offered by <a href="https://www.whitelabelagency.co/" rel="noopener" target="_blank">White Label Agency</a> were the easiest to manage.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-19-20240911-2200319.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, White Label Agency project pricing"></p> <p>This approach focuses on the value of the outcome (e.g., a fully functional, custom-designed website) rather than the time spent on individual tasks.</p> <p><strong>What I like: </strong>Project-based pricing allows White Label Agency to provide clear, upfront pricing to their clients, ensuring transparency and trust. This strategy helps them manage project scope effectively, focus on delivering high-quality work, and maintain profitability.</p> <h3><strong>7. Value-Based Pricing Strategy:</strong> <strong><a href="https://www.inbound.com/register" rel="noopener" target="_blank">INBOUND</a></strong></h3> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-20-20240911-2374990.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, INBOUND ticket options"></p> <p>While <a href="http://inbound.com/" rel="noopener" target="_blank">INBOUND</a> doesn't leave the ultimate ticket price up to its attendees, it does provide a range of tickets from which customers can choose. This allows you to choose what experience you want to have based on how they value the event.</p> <p>INBOUND tickets change with time, however, meaning this pricing strategy could also be considered dynamic (like the Cubs example above). As the INBOUND event gets closer, tickets tend to rise in price.</p> <p><strong>What I like: </strong>The two ticket options — general admission and VIP — allow customers to choose the experience they are willing to pay for.</p> <h3><strong>8. Bundle Pricing:</strong> <strong><a href="https://www.adobe.com/africa/creativecloud/plans.html?gclid%3DCj0KCQjws560BhCuARIsAHMqE0GzIVyaSnt82klqSuATZrxTvwcsmalaPQajEgKtI9Eyl-DsmZ8vOPwaAhdJEALw_wcB%26mv%3Dsearch%26mv%3Dsearch%26mv2%3Dpaidsearch%26sdid%3DD8F91K7Y%26ef_id%3DCj0KCQjws560BhCuARIsAHMqE0GzIVyaSnt82klqSuATZrxTvwcsmalaPQajEgKtI9Eyl-DsmZ8vOPwaAhdJEALw_wcB:G:s%26s_kwcid%3DAL!3085!3!547014887689!e!!g!!adobe%2520creative%2520cloud%2520price!12704498636!121082081912%26gad_source%3D1" rel="noopener" target="_blank">Adobe Creative Cloud</a></strong></h3> <p>I like bundle pricing, especially for big projects. When building my website, I found Adobe Creative Cloud’s bundle pricing perfect. This strategy offers a suite of tools at a single price, making it more manageable and cost-effective.</p> <p><img src="https://knowledge.hubspot.com/hubfs/pricing-strategy-examples-21-20240911-1806551.webp" style="margin-left: auto; margin-right: auto; display: block; width: 650px; height: auto; max-width: 100%;" title="" loading="lazy" alt="pricing strategy examples, Adobe bundling plans"></p> <p>Adobe Creative Cloud effectively combines multiple services into one package to enhance its <a href="https://blog.hubspot.com/marketing/write-value-proposition" rel="noopener" target="_blank">value proposition</a> and simplify purchasing decisions.</p> <p><strong>Best for: </strong>Businesses that offer a variety of related products/services can benefit from bundling to upsell and cross-sell their customers.</p> <h3><strong>9. Geographic Pricing: Gasoline</strong></h3> <p>Gasoline is notorious for having a wide range of prices around the world, but even within the United States, prices can vary by several dollars depending on the state you live in.</p> <p><a href="https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n%3DPET%26s%3DEMM_EPM0_PTE_SCA_DPG%26f%3DM" rel="noopener" target="_blank">In California</a>, for example, gas prices have consistently hovered around $5 in the summer months for the past 10 years. On the other hand, <a href="https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n%3DPET%26s%3DEMA_EPM0_PWG_SIN_DPG%26f%3DM" rel="noopener" target="_blank">gas prices in Indiana</a> have been in the $3 range during the same time period. Laws, environmental factors, and production cost all <a href="https://fox40.com/news/local-news/california-gas-prices-soar-but-experts-say-not-to-panic/%23:~:text%3D%25E2%2580%259CThere's%2520not%2520only%2520state%2520taxes,get%2520gas%252C%25E2%2580%259D%2520Avila%2520said.%26sa=D%26source=editors%26ust=1726085849642310%26usg=AOvVaw0xJ0xQT8qJ2wTD1bLFSxwI" rel="noopener" target="_blank">influence the price of gasoline in California</a>, which causes the geographic disparity in the cost of the fuel.</p> <p><strong>Pro tip: </strong>If you sell in multiple regions, be mindful of different factors that could affect the local markets and modify your prices accordingly.</p> <a id="get-your-pricing-strategy-right" data-hs-anchor="true"></a> <h2><strong>Get Your Pricing Strategy Right</strong></h2> <p>Thinking about everything that goes into pricing can make your head spin: competitors, production costs, customer demand, industry needs, profit margins … the list is endless. Thankfully, you don’t have to master all of these factors at once.</p> <p>Simply sit down, calculate some numbers (like your COGS and profit goals), and figure out what’s most important for <em>your</em> business. Start with what you need, and this will help you pinpoint the right kind of pricing strategy to use.</p> <p>More than anything, though, remember pricing is an iterative process. It’s highly unlikely that you’ll set the right prices right away — it might take a couple of tries (and lots of research), and that’s OK.</p> <div id="hs_cos_wrapper_widget_72228345-673a-4a33-8be1-9ac04d9600af" class="hs_cos_wrapper hs_cos_wrapper_widget hs_cos_wrapper_type_module" style="" data-hs-cos-general-type="widget" data-hs-cos-type="module"> <section class="blog-fwcta" data-state="offer"> <div class="blog-fwcta-offer"> <div class="blog-fwcta-offer-content"> <div class="blog-fwcta-offer-img"> <img src="https://offers.hubspot.com/hubfs/Image%20Hackathon%20%E2%80%93%20Vertical%20(45).png" loading="lazy" alt=""> </div> <div class="blog-fwcta-offer-text"> <h3 class="blog-fwcta-offer-title">Free Sales Pricing Strategy Calculator</h3> <p class="blog-fwcta-offer-subtitle">Determine the best pricing strategy for your business with this free calculator and template.</p> <ul class="blog-fwcta-offer-value-prop-list"> <li class="blog-fwcta-offer-value-prop"> <svg 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src="https://53.fs1.hubspotusercontent-na1.net/hub/53/hubfs/app%20store%20high%20res.png?width=136&height=45&name=app%20store%20high%20res.png" alt="Download on the App Store" width="136" height="45" loading="lazy" srcset="https://53.fs1.hubspotusercontent-na1.net/hub/53/hubfs/app%20store%20high%20res.png?width=68&height=23&name=app%20store%20high%20res.png 68w, https://53.fs1.hubspotusercontent-na1.net/hub/53/hubfs/app%20store%20high%20res.png?width=136&height=45&name=app%20store%20high%20res.png 136w, https://53.fs1.hubspotusercontent-na1.net/hub/53/hubfs/app%20store%20high%20res.png?width=204&height=68&name=app%20store%20high%20res.png 204w, https://53.fs1.hubspotusercontent-na1.net/hub/53/hubfs/app%20store%20high%20res.png?width=272&height=90&name=app%20store%20high%20res.png 272w, https://53.fs1.hubspotusercontent-na1.net/hub/53/hubfs/app%20store%20high%20res.png?width=340&height=113&name=app%20store%20high%20res.png 340w, 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