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Pricing Strategy

The method by which a business sets prices for its products or services, balancing cost coverage, market positioning, and customer perception.

A pricing strategy is the method by which a business determines what to charge. It accounts for three inputs: the cost of producing and delivering the product (the floor — prices below this lose money), the prices competitors charge (the context — prices far outside this range require justification), and the customer’s perception of value (the ceiling — the maximum a customer will pay).

Common pricing approaches for small businesses include cost-plus pricing (cost + fixed markup), competitive pricing (matching or undercutting the market), and value-based pricing (setting price based on what the customer perceives the product is worth rather than what it costs to produce). Most real pricing combines elements of all three.

See Pricing Strategy and Menu Engineering for a full treatment.

Relations

Date created
Date updated
Determines
Revenue model
Governed by
  • Marginal cost
  • Willingness to pay
  • Price elasticity
Part of
Business disciplines marketing terms
Tags

Cite

@misc{emsenn2026-pricing-strategy,
  author    = {emsenn},
  title     = {Pricing Strategy},
  year      = {2026},
  note      = {The method by which a business sets prices for its products or services, balancing cost coverage, market positioning, and customer perception.},
  url       = {https://emsenn.net/library/business/domains/marketing/terms/pricing-strategy/},
  publisher = {emsenn.net},
  license   = {CC BY-SA 4.0}
}