A pricing strategy is simply a method for deciding what to charge. Here are six.
Direct answer
Common small-business pricing strategies are cost-plus (cost plus a margin), value-based (price by what it's worth to customers), competitor-based (price relative to the market), tiered (good, better, best), bundling (packages) and psychological pricing (for example, ending prices in .99). Most small businesses start with cost-plus to protect profit, then move toward value-based pricing.
The six strategies
1. Cost-plus
Cost per unit plus a margin. Simple and safe, but may leave money on the table.
2. Value-based
Price by the benefit to the customer. Strong when your product saves time or money.
3. Competitor-based
Price near, above or below others. Useful as a check, not as the only method.
4. Tiered
Offer basic, standard and premium options. People often pick the middle one.
5. Bundles
Combine items at a combined price. Raises the average sale.
6. Psychological
Small cues like a "from" price, charm prices or a visible anchor price.
Which to use
| Situation | Try |
|---|---|
| New product, unsure | Cost-plus, then test |
| Clear benefit to the customer | Value-based |
| Crowded market | Tiered and bundles |
| Selling several items | Bundles |
Before you choose
Know your real costs. See how to price a product and, for freelancers, how to price your services.
Test, don't guess
Change one thing, watch sales for a few weeks and keep what works.
Where Teyro fits
Teyro's How to Price a Product or Service course teaches what a sale really costs, what it's worth to customers, and how to set, test and raise prices. It is free to start. If you're still deciding on an idea, see how to validate a business idea.
The bottom line
Start simple, learn from customers and adjust.
