What is a Pricing Strategy?

If you own a business, you may be wondering how to determine the appropriate price for your goods or services. Perhaps you’re a customer who has seen price differences for similar products and wondered why. This article will define a pricing strategy, present examples of popular pricing methods, and discuss the necessity of selecting the proper price strategy for your organisation.


A pricing strategy is a method or plan that a business uses to determine the price of its products or services. It involves considering various factors such as production costs, competition, consumer demand, and marketing goals to set a price point that balances customer appeal with profitability.

Examples of Pricing Strategies

  1. Skimming Pricing Strategy: This involves setting a high price for a product or service during its initial release to create an impression of exclusivity and high value.
  2. Penetration Pricing Strategy: This involves setting a low price to attract a large number of customers and gain market share.
  3. Dynamic Pricing Strategy: This involves adjusting prices based on real-time demand, allowing businesses to capitalize on peak periods of customer interest.
  4. Freemium Pricing Strategy: This requires offering a basic version of a product or service for free while charging a premium for more features or content.
  5. Discount Pricing Strategy: This strategy includes offering temporary price reductions or sales in order to attract price-sensitive clients.

Importance of Pricing Strategy

A pricing strategy plays a crucial role in a company’s overall business plan. It can impact a business’s profitability, sales, and brand perception. Choosing the best pricing plan can also assist a company obtain a competitive advantage in the market.


In summary, a pricing strategy is a critical component of any successful business plan. By considering factors such as production costs, competition, consumer demand, and marketing goals, a business can determine the right price to attract customers.

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