Pricing is one of the fastest levers a business can pull to affect revenue—but only when it’s set deliberately, not by default.
In fact, over 80% of buyers assess competitor prices before deciding to purchase.
If you get your pricing strategy wrong, you’re leaving money on the table and undercutting your positioning. Or, you’ll push your potential customers straight to a competitor.
In this guide, we’ll cover the main pricing strategy types, real-world examples of each one, and a framework you can use to choose the right type for your business.
What is a pricing strategy?
A pricing strategy is the method a business uses to determine what to charge for its products or services, and why. It’s more than just a number since it connects your cost structure, market position, and what customers believe your offering is worth.
This makes it a direct driver of your revenue growth, competitive positioning, and customer perception.
Pricing strategy isn’t one-size-fits-all. What works for a SaaS startup will be different from what works for a mature B2B services firm.
Your pricing strategy should also be revisited regularly, rather than being forgotten once you launch. This is because markets shift, costs change, and customer expectations will continue to evolve.
Strategically treating pricing as an ongoing discipline (not something that’s fixed) will help you grow through price optimization instead of just cost-cutting or discounting.
Types of pricing strategies
Pricing isn’t about blindly throwing a dart at a board and choosing whatever number you land on.
There are a few common pricing strategies with intentional tactics behind them.
What best applies to your marketing strategy depends on what you’re selling and your ideal customer.
Let’s go over some of the most common pricing models, along with their pros and cons.
What is the best pricing strategy for you?
Let’s go over some pricing strategy examples, as only you can decide on your pricing method of choice.
Cost-plus pricing
Cost-plus pricing is as basic as it sounds. Take the cost of your product, and mark it up.
Pro: Easy, simple way to create pricing and margin profits.
Con: Not strategic. Doesn’t take into account competitor pricing or a customer’s willingness to pay (WTP).
Best for: Manufacturers and businesses with predictable cost structures.
This is particularly disadvantageous in the SaaS industry, where a value-based approach resonates best with target consumers on the bottom line.
Value-based pricing
This one is a bit more ambiguous, but with the right data, it can be a highly effective approach.
Value-based pricing is based on what customers believe your product or service is worth to them. This strategy is the most important to SaaS and B2B, as these industries are value-based and need to position themselves as such to stand out from the crowd.
Also known as the premium pricing strategy.
Pro: Because price is based on perceived value rather than competitor benchmarks, this strategy is most effective for maximizing revenue proportional to what you can actually deliver.
Con: Diligent research and a constant ear to the ground are required to stay on top of things and remain in tune with consumer reviews.
Best for: B2B SaaS companies and professional services firms with a clearly differentiated offering. If your product solves a problem competitors can’t match, value-based pricing lets you capture what the market will actually bear.
Competitor-based pricing
Competitor-based pricing is pricing based on your competitors.
Whether it’s having a lower price to edge out the competition or a higher price to convey perceived value, this competitive pricing strategy can be hit or miss.
Pro: Watching your competitors helps you stay within market range and adjust to changes as needed.
Con: If this is your sole focus, you risk losing sight of a value-based approach and may lose revenue and customers with too many fluctuations.
Best for: Businesses that enter an established market where price benchmarks are widely known and customers actively compare while they shop. This could be e-commerce, retail, or commodity SaaS, for example.
Penetration pricing strategy
This strategy is often utilized by those moving fast. It’s the tactic of setting a low initial price to attract customers and get their foot in the bigger market with the intent to gradually raise prices later.
Pro: Helpful when coming into a saturated market, as consumers will be more likely to give you a try if your price is exceptionally lower than the competition.
When done right, this can be a highly effective pricing strategy.
Con: With high reward comes higher risk.
You could be losing long-term revenue and customers as pricing increases. Especially if done too often, and too quickly.
Best for: New businesses entering a crowded market who can afford to start with thinner margins early on in exchange for building a customer base quickly.
Dynamic pricing strategy
Dynamic pricing uses real-time market trends and data from inventory levels and customer demand.
Pro: Flexible with a shifting market, giving businesses more leverage with profit margins.
Con: Too many price adjustments risks losing customers and having the business come off as lacking confidence in their value and positioning in the marketplace.
Best for: Industries like travel, hospitality, and marketplaces where the demand can shift often and flexible pricing can help protect margins.
Tiered pricing
Tiered pricing offers products or services at multiple price levels, corresponding to a set of features or usage limits.
A tiered pricing approach helps businesses cater to different customer segments by providing options that align with their needs and budget.
Pros: Enhances the buying experience by outlining the value of each tier and making it easy for customers to choose.
May also encourage customers to upgrade to higher tiers when their company or business needs expand, which can increase customer lifetime value.
Cons: Requires careful structuring to avoid too many choices or confusion about pricing their services.
Best for: Subscription and SaaS businesses that serve customers with different needs and budgets, and want to create a natural path to upgrade.
Bundle pricing
Bundle pricing involves combining complementary products or services and selling them as a bundle with a combined price. This is often a better deal than purchasing each item individually.
Software and service companies often use a bundle pricing strategy.
Pros:
- Increases sales volume: By offering multiple items at a reduced price, customers are more likely to purchase more.
- Introduces new products: Companies can bundle high-demand products with lesser-known products to introduce customers to new offerings.
- Simplifies purchase decisions: Customers receive a curated set of products that meet their needs.
Cons:
- Lower perceived value: Customers may think bundled items are of lesser quality.
- Decreased profit margins: Offering discounts on bundles can reduce profit margins, especially when high-value items are included at lower price points.
Inventory challenges: Managing bundled products can be difficult, especially when items are also sold separately.
Best for: Companies with multiple complementary products that are more compelling and more profitable when they are sold together.
Mastering your pricing strategy
You may be sitting here nodding, scrolling, ready to sink your teeth into how to use your (new) knowledge of pricing models to your advantage.
Here’s what you need to ask yourself when crafting your perfect price:
Value and market position
- While lower pricing may be effective initially, it can also be associated with a cheaper product. How do you plan to market your value to consumers? Also known as value-based pricing.
Business goals
- Which matters more to you right now, market share or long-term value?
- Are you aiming to be cost-based, or going off the value of your product?
- Depending on your product, have you factored in the cost of production and consumer demand?
Customer perception
- How do you plan to clearly communicate price fluctuations to your customers?
- What are the pain points customers currently have in your industry, and how can you best solve for their needs to promote customer value?
Competitors
- Who are your biggest competitors? Look for 3-5, depending on your industry.
- What are their prices, and how do they vary?
- Are your services/products comparable, or do you have specifics they may not?
- Based on market research, do they offer freemium pricing or bundle pricing options, and will you?
On the flip side, it’s equally important to understand what makes a weak pricing strategy.
Poor targeting
- Not marketing correctly, reaching the wrong customers, and losing out on the right ones.
- A high price with too much markup for the customer base.
Incorrect value portrayal
- Exaggerating what the consumer will get with their purchase, pricing too low for a high-value product, etc.
Not finding the sweet spot
- Prices too high or too low compared to similar products will cause potential buyers to hesitate.
- Sales volume and price-sensitivity aren’t factored into decision-making.
Pricing strategy comparison at a glance
There’s no single pricing strategy that will work for every business. The right choice for you will depend on your market, cost structure, and what your customers are buying.
You can use this table as a quick reference to compare the seven main approaches we covered earlier.
Pricing strategy case studies
If you’re overwhelmed by narrowing down the best selling price, we’ve got you.
Sometimes it helps to look at historical data of companies that have been there, done that, and reported back on the trial-and-error of pricing strategies for you.
Disney+ and penetration pricing
Back in 2019, Disney+ was far from the first big studio to launch a streaming platform.
In fact, many considered them late to the game.
While Disney is a major household name, Netflix and Hulu dominated the market.
Method
So, what did Disney do?
They adopted the penetration pricing model to break into market shares and get traction by starting out with a fiercely competitive low price of only $6.99 a month.
This business model positioned them as the economy-priced option for new customers while still offering a high-quality product.
Outcome
This strategy worked well for Disney+, which steadily increased its prices after building a large monthly subscriber base.
Part of the effect was positioning their value with more original content, such as The Mandalorian, and making access to all Marvel (a Disney company) and Disney content exclusive to their platform.
Canva and value-based pricing
The go-to graphic design site for non-graphic designers has moved through a few iterations since coming onto the scene in 2012.
In 2019, Canva had a flat-rate pricing model for a monthly subscription of $12.95 in addition to keeping its free basic plan.
Now, there’s also Canva for Teams at $14.99 monthly for 5 seats.
Outcome
Canva took a slow-and-steady approach, letting customers discover and try them out before ever asking for money.
As word spread and use increased, they launched their first monthly subscription plan, backed by the added value of new and improved features.
If someone didn’t need that, they could simply keep their free version.
A few years later, they added a third-tier value package for companies for a very small amount more, making it more attractive to purchase the package than 5 individual Pro accounts.
At present, Canva has over half a million team subscriptions. Some are from large corporations, such as Zoom and Marriott.
As of 2025, there are over 180 million users on Canva
In their case, the slow-and-steady value-based pricing model was highly successful.
Measuring and refining your pricing strategy
Once you choose a pricing strategy, it doesn’t end there. You want to stay competitive and protect margins over time, which means you need to actively monitor your pricing performance and adjust when you have meaningful data to support changes.
Here are two disciplines that make that possible.
Pricing analytics
Pricing analytics is a data-driven strategy for understanding how pricing impacts a business.
Companies can use data insights to adjust their pricing strategy. This approach looks at competitor pricing, market trends, and customer behavior.
Pricing analytics can enhance profitability and allow audience segmentation and customized pricing, catering to diverse customer needs and preferences. Implementing pricing analtyics can give companies a competitive edge and boost customer satisfaction.
Learn more about how pricing analytics can help your business.
Pricing intelligence
Online pricing intelligence is another data-driven approach to optimize your pricing strategy.
Pricing intelligence involves continuously monitoring and analyzing competitor pricing, customer behavior, and market trends to make agile pricing decisions while ensuring competitiveness and profitability.
Implementing pricing intelligence helps businesses to respond to market changes and align pricing with customer expectations.
See how pricing intelligence can transform your pricing strategy.
How CPQ software helps you execute your pricing strategy
Deciding on the right pricing strategy for you is one thing. Making sure it’s applied consistently across all your quotes, by every rep, and for every deal is another.
That’s where CPQ software can help.
Configure, Price, Quote software is a system that automates configuring complex products, applying pricing rules, and generating accurate quotes. This means your pricing strategy will translate to every customer interaction while cutting down on time spent on administrative tasks.
if your team is trying to manage tiered pricing, dynamic models, or complex product configurations, CPQ will handle what manual spreadsheets and processes can’t keep up with:
- Applies pricing rules automatically so reps never quote below margin
- Enables dynamic pricing models and tiered structures across your product catalog
- Connects competitor pricing data to quote decisions in real time
- Eliminates manual calculation errors in complex product or service configurations
- Generates professional, accurate quotes in minutes rather than hours
With automated pricing rules, you’ll also have less risk of reps going off-script under deal pressure when it comes to your discounting strategy.
HAAS Alert reported saving over 120 hours of admin work each month, resulting in a 66.67% increase in efficiency by using PandaDoc CPQ.
“CPQ has transformed our quoting process. Our quoting is not only more efficient but also much more attractive, offering an Amazon-esque experience to our customers. It has significantly streamlined our operations and enables reps to generate proposals in real time.” – Mike McCormick, Director of Employee Education
PandaDoc CPQ for HubSpot lets teams generate quotes right from their CRM without switching tools.
PandaDoc is the only CPQ solution with two-way CRM integration. This means customer data syncs between platforms automatically, eliminating manual entry and keeping pricing consistent across your entire sales workflow.
Depending on your needs, and if you already have a CRM in place, there are a few options when it comes to choosing a CPQ software that’s right for you.
PandaDoc CPQ includes:
- CRM integrations for easy set-up
- Pricing rules
- Drag-and-drop editor
- Approval workflows
- Guided selling
- Embedding trusted payment options to make closing easy
PandaDoc CPQ allows your team to easily manage all parts of the sales process.
Ready to execute your pricing strategy with precision? Request a demo or start your PandaDoc trial.
Disclaimer
PandaDoc is not a law firm, or a substitute for an attorney or law firm. This page is not intended to and does not provide legal advice. Should you have legal questions on the validity of e-signatures or digital signatures and the enforceability thereof, please consult with an attorney or law firm. Use of PandaDoc services are governed by our Terms of Use and Privacy Policy.
Originally published November 8, 2024, updated April 22, 2026
Frequently asked questions
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A pricing strategy is a method that a business can use to determine what to charge for its products and services. It will take into account costs, customer perception, market positioning, and competition. Your pricing strategy will directly affect revenue, growth, and how your customers perceive your brand.
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There are seven most common pricing strategies, including: cost-plus, value-based, competitor-based, penetration, dynamic, tiered, and bundle pricing. Each of these strategies work well for different business models, markets, and growth stages. You can see the comparison above for a breakdown.
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This depends on what you’re selling and who you’re selling to.
- Cost-plus pricing would work well for product-based businesses as it has a simple starting point.
- Value-based pricing will give you better margins if you’re a service or SaaS business.
Most small businesses, however, benefit from starting simple and then refining as they figure out what customers are willing to pay for their product/service.
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Cost-plus pricing will start with how much it costs you to produce something and then adds a markup. Value-based pricing, on the other hand, will start with whatever the customer believes the product is worth.
It’s simpler to use cost-plus pricing, but it can sometimes leave potential revenue on the table. Value-based pricing can give you stronger margins, but it needs more research.
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You want to start by understanding your cost structure, competitors, and how much your target customer is willing to pay. Once you figure out these aspects, you can consider your growth stage (if you’re new to the market, you’ll have different priorities than those of an established player). There’s usually not just one right answer, but using our comparison table will help you get started in the right direction.
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Disney+ is a great example of successful penetration pricing, as they launched at $6.99/month to undercut their established competitors and build a solid subscriber base before they eventually raised their prices.
An example of value-based pricing is Canva, who built a free tier to establish habit and trust in their product before monetizing through paid plans with added features.
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Review your pricing strategy at least once a year, but if you can, do it more frequently. This is especially important if your market is competitive and your costs change.
Pricing that you set when you launch rarely stays at the optimal amount when your business grows, or when you enter new markets. Always think of it as an ongoing strategy instead of setting it once and forgetting about it.
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CPQ software is great for helping you execute your pricing strategy consistently at the deal level. It does this by applying pricing rules automatically, enabling tiered and dynamic pricing structures, and creating accurate quotes, all without having to calculate manually. Without CPQ, it’s easy for pricing strategies to break down as soon as it hits the sales cycle.
