The Untapped guide to pricing strategy

This is the structure behind the price. Do customers pay monthly, per user, per outcome, or upfront for a bundle of services?

This is the method used to determine your price points. It may be based on your costs (cost-plus pricing), how others in the market price (competitive pricing), or the value customers receive (value-based pricing).

This is the strategic layer. It links your pricing model and price-setting approach to your goals, brand, and customer value. It explains the reasoning behind how you charge and how much you charge. Finally, it ensures those decisions support long-term growth, not just short-term revenue.

Pricing is reactive. Teams pull in different directions.

Sales push for discounts. Finance chases margin. Product wants uptake. Without a shared strategy, pricing becomes a tug-of-war, rather than a growth lever.

Pricing is treated as a risk, not a growth tool.

Leaders tiptoe around pricing or frame it as something to minimise or apologise for. This cautious mindset permeates the business, leading to weak pricing and missed opportunities.

Prices stay static while the world moves on.

Your costs rise, competitors adapt, and customer needs evolve, but pricing gets left behind. Inaction quietly erodes margins, weakens your market position and dulls your competitive edge.

Lower prices become the norm, not the strategy.

Discounting becomes a habit — after all, it’s the fastest way to close a deal, right? Except it’s shrinking your margins, undermining your offer, and making it harder to charge full price again.

You know there’s real value, but it takes too long to explain, and rarely lands the same way twice.

If your team can’t communicate it quickly and clearly, customers won’t connect the price to the payoff. That’s when the price gets blamed. Not because it’s too high, but because the value story isn’t doing its job.

Charge based on what your offer is worth to the customer.

This is one of the most powerful and misunderstood pricing strategies. Instead of starting with your costs or your competitors, you start with the customer. What problems are you solving? What outcomes are they paying for? How do they define value?

When it works:

• You have a differentiated offer or strong brand
• You deliver measurable outcomes or savings
• You understand customer segments and priorities deeply

When done well, value-based pricing unlocks margin, aligns teams, and increases customer satisfaction. But it takes effort: customer research, clarity, and the ability to communicate value with confidence.

Use the market to position your price.

This approach anchors your prices to what competitors are charging. It’s less about matching or undercutting, and more about knowing where you sit in the market. Competitive pricing can be a useful reference point, but it should support your positioning, not define it.

When it works:

• Your market is price-sensitive or crowded
• You have comparable products or services
• You want to signal something specific through price (e.g. entry-level, premium, value-for-money)

A word of warning: Constantly reacting to competitors can backfire. If you’re not careful, you end up in a race to the bottom, losing sight of the unique value you offer.

Set your price by adding a margin to your costs.

This approach starts with the internal cost of delivering your product or service, then applies a fixed markup. It’s clear, easy to implement, and ensures costs are covered which is why it’s widely used in retail, manufacturing, and some service sectors.

When it works:

• You offer standardised or commodity products
• Pricing simplicity is a priority (e.g. for procurement or compliance)
• Costs are stable and predictable

The risk is leaving value on the table. Cost-plus ignores what customers are actually willing to pay, and can lead to prices that feel out of sync with market or value perception.

Start low to build traction, then increase over time.

Penetration pricing means launching with a low price to attract attention, reduce barriers to entry, or build market share quickly. Once you’ve gained traction and established value, prices can increase gradually.

When it works:

• You’re entering a competitive or price-sensitive market
• Speed of adoption matters more than early margin
• You have a plan to increase prices as value becomes clear

This approach works well for digital products, new service launches, or disruptive entrants. The key is having a clear path beyond the initial low price—otherwise, you risk anchoring expectations too low and leaving long-term value behind.

Adjust prices based on demand, behaviour, or context.

Dynamic pricing uses data to adapt prices in real-time or at regular intervals. It’s based on variables like customer behaviour, time, seasonality, or inventory. The goal is to maximise revenue by matching price to perceived value or urgency.

When it works:

• You operate in a fast-moving or seasonal market
• Customer demand varies by time, location, or segment
• You have access to data and tools to monitor and update pricing

It’s common in sectors like travel, events, ecommerce, and transportation, where supply and demand fluctuate constantly. Done well, it increases revenue and responsiveness. Done poorly, it can confuse customers or erode trust—especially if prices feel unpredictable or unfair.

Use behavioural insights to influence perception and decision-making.

This approach is rooted in how people perceive price, not just the number itself. It involves pricing psychology tactics like charm pricing (£9.99 instead of £10), price anchoring (showing a higher-priced option first), tiered packages, decoy options, or price bundling.

It’s often layered on top of other strategies, such as value-based or cost-plus pricing and it plays a powerful role in increasing conversion and shaping perceived value.

When it works:

• You want to make pricing easier to understand and more compelling
• You want to guide buyers toward higher-value options or increase average order value
• You want to reduce friction at the point of decision

While psychological pricing doesn’t change what you charge, it changes how the price is presented, which can have a measurable impact on buying decisions.