What you charge for your products or services plays a critical role in shaping both your sales performance and profitability. It influences how your customers perceive the value of what you're offering, affecting their willingness to buy.

Additionally, your pricing strategy can position your brand in the market, helping to differentiate you from competitors. Whether you aim to attract price-sensitive customers or establish a premium reputation, the right pricing approach can build trust, drive demand, and provide long-term sustainability.

You should explore various pricing models and strategies to find one that aligns with your business objectives, market conditions, and customer expectations.

 

Use market insights to shape your pricing

You can get valuable guidance on how to price by researching:

• Competitor pricing, their key benefits and features of what they offer and any points of difference you can see in your own product or service.
• Perceived customer value by segment, especially in B2B or complex sales environments where ROI calculations often drive decision-making.
• Tiered offerings, such as standard vs. premium service levels or SaaS feature packages.
• Industry benchmarks, available from sources like Gartner, IBISWorld, McKinsey, or U.S. Bureau of Labor Statistics, to understand pricing trends and labor cost shifts.

Invest in customer research, including focus groups or third-party data partners, to identify what customers are actually willing to pay and where they see differentiation. Compare buyers’ risk on each product or service you research, as if you’re able to offer more value, e.g. better quality or more features, you may be able to charge a higher price.

 

Choose the pricing model that best match your business complexity

When developing a pricing strategy, it’s important to consider various options based on your product, market, and business model. Here are some of the most common pricing methods:

• Cost-plus pricing, especially for manufacturing, wholesale, or contract-based supply chains, where transparency is required.
• Value-based pricing, where pricing is based on measurable outcomes (e.g., cost savings, efficiency gains). This is especially relevant in consulting, legal services, or tech platforms with measurable impact.
• Subscription and usage-based pricing, commonly used in SaaS, is ideal for companies with recurring revenue models and a need for predictable cash flow.
• Dynamic pricing, which adjusts in real-time based on demand, location, or customer profile. Airlines, freight services, and e-commerce platforms use this to optimize profitability.
• Performance-based pricing, where pricing is tied to results (e.g., percentage of sales growth, ROI targets), useful in B2B marketing, finance, and tech integration services.

Many businesses adopt a combination of different pricing models depending on their products and services. For example, software or subscription businesses might price based on demand forecasts, while others might mix hourly rates and fixed prices.

 

Balance margin targets with market expectations

Review prices regularly to make sure you’re keeping up with trends in your industry and the overall market. If you cut prices, customers may not respond if they perceive new prices as signaling low-quality or a lack of confidence and experience.

While increasing margin is a key objective, pricing must align with customer expectations and competitive positioning:

• In commodity markets, price sensitivity is high. Bundling, volume discounts, or exclusive service add-ons can help defend margins.
• In professional services or complex solutions, emphasize the total value delivered and use case studies, ROI models, and third-party validation to support your pricing.
• For national or global offerings, regional pricing strategies may be needed to reflect labor cost variances, local purchasing power, or import/export considerations.

Before raising prices, understand not just what competitors charge, but also what value they deliver at that price point and how your customer experience compares.

 

Convincing your customers

Whether you’re adjusting rates, launching a new pricing model, or rationalizing your portfolio, communication must be clear and proactive especially with key accounts.

• Provide notice and context to inform customers of increases in advance and explain cost drivers (e.g., increased materials, labor shortages, compliance changes).
• Offer transition plans or grandfathering (where you don’t increase the price for large or long-standing clients.
• Equip sales teams with talking points and value arguments, so they can explain the pricing changes with confidence and consistency.
• For e-commerce or self-service platforms, implement tiered pricing models with clear feature breakdowns.

In high-trust relationships such as long-term B2B contracts or subscription renewals, clients often respond well to transparent, data-backed explanations.

 

Review and optimize continuously

Ideally pricing should be a quarterly or monthly process, not an annual one. Build pricing into your regular analytics and strategy reviews and:

• Track gross margin by SKU or service line, and customer lifetime value.
• Analyze churn post-price changes and segment by customer type or deal size.
• Coordinate with finance, marketing, and product teams to ensure that pricing supports broader goals and reflects evolving customer value.

The right pricing strategy isn’t just about charging more. It’s about charging wisely, based on the value you deliver, the market conditions you operate in, and the goals your business is pursuing.

 

Next steps

• Assess your current pricing model and determine if it aligns with your business objectives, market conditions, and customer expectations. Consider whether a combination of pricing methods would work best for your business.
• Regularly evaluate your competitors’ pricing, customer expectations, and industry trends to ensure your prices remain competitive and relevant.
• Carefully analyze the potential effects of price increases or discounts on customer behavior, sales volume, and profit margins. Be strategic in communicating any changes to maintain customer trust.
• Experiment with different pricing strategies and monitor performance to understand what works best. Be open to adjusting your approach as your business evolves and the market shifts.

Review your pricing options before you decide which suits your business best. Unless you’re planning to seriously disrupt the market, you should be aiming to charge as much as you can.