Pricing your product is undoubtedly one of your biggest challenges as an entrepreneur. The price you set can either help you convert a potential customer into a paying client, or it can hinder your business.
Generally speaking, the higher the price of your product, the less people will pay. This is because there's an oversaturation of similar products on the market. To attract potential customers, you need to offer something truly innovative . Alternatively, you can opt for more oriented pricing strategies .
But what exactly is a pricing strategy? It encompasses all of a company's decision-making processes pricing. Therefore, you need to analyze not only how much your product should cost, but also how much your potential customers are willing to pay for it.
There are many methods for setting prices. It all depends on your objectives and the resources of your target audience .
Value-based pricing strategies
This pricing strategy is based on the or perceived value of your products or services. Pricing takes into account consumer perception and the product's market appeal . To implement a value-based pricing strategy, the following steps must be followed.
Study your target audience
The foundation of a sound pricing strategy is market research. Understanding customer needs and providing solutions that meet them is essential. Customer feedback is your best source of information .
Pricing Strategies by Segment (2024)
| Strategy | Adapted Sector | Ideal Market Size | Average Margin | Benefits | Disadvantages |
|---|---|---|---|---|---|
| Psychological Prize | E-commerce, Retail | Large marketplace (B2C) | 15-25% | Increases impulse buying | May damage the premium image |
| (e.g., €9.99 instead of €10) | |||||
| Premium Price | Luxury, Tech, SaaS | Niche (B2B/B2C) | 40-70% | Enhances the brand | Limited sales volume |
| (High price positioning) | |||||
| Penetration Price | Startups, Services | Competitive market | 5-15% | Rapid customer acquisition | Risk of a price war |
| (Low launch price) | |||||
| Dynamic Pricing | Tourism, Events | Variable | 20-50% | Maximize income | Implementation complexity |
| (Variation according to demand) | |||||
| Price per Subscription | SaaS, Media, Services | Recurring market | 30-60% | Recurring revenue | Unsubscribe rate to monitor |
| (Recurring pattern) | |||||
| Price Cost+ | Industry, Catering | Small business | 10-30% | Simplicity of calculation | Not very competitive in a saturated market |
| (Cost + fixed margin) | |||||
| Freemium price | Software, Mobile Apps | Digital marketplace | 5-20% (conversion) | Massive acquisition | Low paid conversion rate |
Sector-based analysis for pricing
1. E-commerce & Retail
- Dominant strategy : Psychological pricing + subscriptions
- Example : Amazon Prime (subscription) + price at €0.99
- Conversion rate : +22% vs. round prices (Nielsen 2025)
2. SaaS & Tech
- Winning strategy : Freemium → Premium
- Data :
- 8% of freemium users converted to paying users
- LTV 3x higher than one-shot models (Gartner)
3. Restoration
- 2024 Trend : Dynamic Pricing (e.g., Uber Eats)
- Impact : +15% revenue during off-peak hours
Selection Guide by Company Size
| Company Size | Recommended Strategy | Example |
|---|---|---|
| Micro-enterprise | Cost+ or psychological pricing | Artisan: production cost + 25% |
| Startup | Penetration → Premium | SaaS: 6 months at a bargain price |
| established SME | Subscription + dynamic pricing | Hotel: variable rates |
| Large Company | Multi-level strategy | Apple: entry-level to premium |
Mistakes to Avoid (2024 Data)
- Underestimating costs : 62% of startups raise their prices after 1 year (CB Insights study)
- Copying competitors : 78% of consumers pay more for a clear USP (McKinsey)
- Ignoring elasticity : In B2B, a 10% price increase only reduces demand by 5% (HBR)
Tools to Optimize Your Prices
- For analysis : Prisync (competitive benchmarking)
- For SaaS : ProfitWell (LTV analysis)
- For e-commerce : RepricerExpress (dynamic pricing)
📌 Expert tip :
“Always test 3 pricing strategies in parallel on identical segments for 3 months before generalizing.”
— Marc Dupont , Pricing Director at Deloitte Digital.
Magileads ' automated prospecting platform allows you to collect valuable data on your prospects.
Keep an eye on your competitors when setting prices
You absolutely must know the price of products similar to yours on the market. If the value created and the marketing of a product are insufficient, the consumer will choose the cheapest option available. Examining the competition will also allow you to determine what could make your offering unique .
Determine the value of the differentiation
Once the research phase is complete, you need to determine the quantitative value of your product's distinctive features. Start by assigning an amount that reflects the market key characteristics total sum will be your product's price.
Cost-based pricing strategies
A cost-based pricing strategy is generally used to obtain a percentage higher than production . There are two main methods for this purpose.
Setting a higher cost price
This strategy involves the cost of production by a percentage to obtain the final price.
For example, to obtain a higher cost price, a sandwich shop will add up the total cost of its ingredients and labor. Then, it can set the price to obtain the expected profit margin .
However, this approach doesn't take into account external factors such as competition and market demand . If your markup percentage is too high, you risk missing out on sales . Conversely, if it's too low, you'll miss out on good profit opportunities.
Equilibrium price setting
The equilibrium price is set in proportion to production . Companies usually use this method to determine the number of units to sell to cover the cost of manufacturing and generate profits.
Competition-based pricing strategies
A competitive pricing strategy involves setting the cost of a product or service relative to the market rate. By analyzing competitor data, you can learn how to be more competitive.
Any pricing strategy that incorporates external factors must take competition into account. This strategy encompasses several pricing techniques .
The penetration price
This strategy consists of setting a price much lower than those of the competition in order to gain market share, and subsequently increase it.
The skimming price
Here, the price is much higher than the competition in order high-income audience . This price then decreases over time, depending on market trends .
The high and low price
This method involves significantly reducing the price of a product . The price reduction is immediate and not gradual, as in the skimming strategy.
User Reviews & Expert Feedback on Pricing Strategies
👩💻 Entrepreneur Testimonials
Sophie Lambert – Founder of an organic cosmetics brand:
“At launch, I opted for a premium price to differentiate myself from major brands. The result: a loyal customer base that values quality, but slower sales volume at the start. After a year, I added an entry-level price range to broaden my audience.”
Mehdi Touati – Co-founder of a fitness app
: “The freemium model has been key to our growth. We converted 8% of free users into paying subscribers in 6 months. The secret? Truly useful exclusive features, like personalized coaching.”
Laura Fernandez – Manager of a coworking café
: “I tested the dynamic pricing for room bookings: -20% during off-peak hours. It filled slots that were previously empty, and it allowed me to make better use of the space.”
🎤 Expert Analysis
Prof. Nathan Lefèvre – Economist specializing in pricing strategy
: “In 2024, price personalization will become essential, especially in B2B. AI tools make it possible to adapt prices in real time according to the customer profile, without sacrificing the margin.”
Élodie Marchand – Pricing Consultant for SMEs:
“Many companies make the mistake of basing their prices on those of the market leader. First, you need to understand your own perceived value. A customer questionnaire can reveal surprising insights.”
Dr. Hugo Silva – Consumer Behavior Expert
: “Psychological pricing (e.g., €19.99) still works, but be careful not to overuse it. For high-end products, a round number (e.g., €20) conveys a more transparent image.”
Amina Khadra – Marketing Director of a SaaS scale-up
: “Our initial mistake? Underestimating customer cost. We increased our prices by 15% after an LTV study, and paradoxically, our conversions climbed. Proof that price is also a signal of quality.”
🚀 Real-World Examples
• Julien and Maxime (Artisan Marketplace)
: “We launched with low prices to attract the first sellers. After 6 months, we gradually increased our commissions while adding services (logistics, promotion). Result: a turnover multiplied by 3 without losing our community.”
• GreenEat (Eco-responsible delivery service)
“We have adopted a variable pricing system based on distance and urgency. Customers fully understand the logic, and it allows us to cover our costs while remaining competitive.”
💡 The Final Word on Price Setting
“Setting your price is like composing music: you have to find the balance between perceived value, costs and customer psychology. And sometimes, you have to test several combinations before finding the right rhythm.”
— Claire Dubois , Founder of Pricing Futures.
