Published On: 22/09/2020By Categories: Uncategorized

Price is one of the first images the consumer takes about the company so a good pricing strategy will make you build your brand image.

According to CBInsights statistics, 18% of startups fail because they do not know how to understand their pricing strategy. This data reveals the importance of price and is that almost 1 in 5 startups close their business for their cost, so before launching a random price, think about what the best option would be.

Many companies think that by having more customers the revenue will be higher, but it is not always so. Optimizing your income is a difficult task, requiring extensive prior study.

What are price strategies?

The price has great importance within the product, but not always the price can be the same. It is clear that, if there were no more variables, we would always put the highest price and get the highest return, but it doesn’t work that way. Some many phases and variables make our price fit.

  • Are we in an initial or final phase?
  • Do we want to attract customers or do we have enough?
  • Is our products novel or is it simply an improvement of others?

There are many variables that we must consider adjusting our price and try to achieve our main goal. With pricing strategies, we will be able to give a different approach to our product depending on the situation in which we are.  Here are a few strategies that can be tailored to your business:

Penetration pricing

This strategy is mainly designed for business beginnings, as it is an aggressive strategy. It consists of a radical price drop, trying to capture market share quickly. It is a strategy that is not sustainable in the medium-long term. With this strategy, you’re trying to attract customers, so they can test your product before the competition. Once you’ve got those customers to use your product, you need to progressively change your strategy to be in a situation that generates more profit and is sustainable.

Captive pricing

The captive pricing strategy is to offer a product that does what you need but that at one point in the use process will require extra actions to continue working. In this way, you have got the user to require “extra” purchases for your product.
One of the clearest examples outside the SaaS market are water jugs with filters, which put a cheap price for the jug, but once you spend the first filter, you must buy filters for a high price. Filters are that captive product that makes, in the end, the price of the jug look compensated and the company generates profits.

In SaaS products, an example would be that design software that only lets you use the images of your program after downloading or upgrading the program to use any image.

Skimming pricing

In this case, we are talking about a pricing strategy for products that we know will have high acceptance and that we will assess the exclusivity of buying it as soon as possible. It is also given for temporary products or that are renewed every little.
The strategy is to put a high exit price and as time goes by progressively going down.
One of the clearest examples is video games, they come out with high expectations and at their highest prices. Many of them, like sports cars, take out one every year. In a matter of 3-4 months, you can find the same product at less than half its first price. In SaaS business it is linked to the Product Adoption Lifecycle, that is, the sooner you have it you can boast access to new technology.

Prestige pricing

We are talking about a strategy of marking prices higher than the competition for our products. This will make us generate a prestigious or quality product value. With this, we also achieve some exclusivity.

This strategy is often used by brands that already have a high profile, allowing them to charge a higher price.

In SaaS products, this feature is typically used by giving subscription options or premium options, which are to pay more for certain product-only features.

Free trial pricing

This strategy is very similar to the Freemium model that we already discussed in a previous post.
It places the product in a free trial period that should not exceed the time margin with which the user is satisfied. It usually lasts 30 days, but each product will have its way of setting the duration. Sometimes it is quantitatively when doing X processes.

A vital requirement will be to track after finishing the premium option to users to get them to buy our product.

Cost plus pricing

To carry out this strategy, most variables are not considered than if others do. You don’t rely on competition, price sensitivity, customers… Etc.

It consists of valuing the product by itself, that is, you only must do the calculation of how much the development and marketing of the product have cost you. When you have that cost, you’ll set the profit you want to get and get the price of the product.

As a starting point, it is simple and applicable. It can be a good way if you don’t have a lot of information.

Value based pricing

As the name suggests, we are talking about a strategy based on the value of the product. This means that the company will set the price depending on what the company believes it provides to customers. That is, this will lead companies to emphasize improving their service to provide greater value.

It is not a strategy of rapid profit, but long-term changes. It is a strategy that is well done favours to carry out a very healthy price periodization and to increase your profits exponentially.


Each product requires special attention when setting its price and it will be of vital importance to make the right choice for your product to be successful. Even within the same company, products may follow different pricing strategies.

Therefore, take a good look at the characteristics of your product, set your goals, study the competition, consider your market and from there, consider which of the above strategies is best for your product.

If you want more information about the SaaS market, you can download our Ebook for free.

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