What Is a Pricing Strategy? | Marketing Dictionary
DICTIONARY · BUSINESS

What is a pricing strategy?

The approach used to determine what customers should pay.

In plain English

A pricing strategy is a deliberate method for setting price, rather than looking at a competitor and going slightly under. Cost-plus, value-based, competitive, premium, penetration.

Price is the most powerful lever most small businesses have and the one they touch least. It changes margin immediately, and it signals quality before anyone has spoken to you.

What to know

Price is a positioning statement
It tells people what kind of provider you are before any conversation. Cheap and premium are both legitimate positions, but they must be chosen.
Cost-plus is safe and limiting
Adding a markup to cost guarantees a margin and ignores what the outcome is worth to the buyer.
Value-based captures more
Pricing around the value created can multiply what you earn for the same work, and requires you to understand and articulate that value.
Test upward carefully
Raising prices on new enquiries first tells you what the market accepts without disturbing existing clients.

Why it matters

A price rise goes almost entirely to profit, because the delivery cost has not changed. For most small businesses a considered increase is the single fastest improvement available, and it is usually postponed for years out of nervousness.

Common mistakes

×Pricing by reference to competitors without knowing their costs or positioning.
×Never raising prices, so margin erodes as costs rise.
×Discounting to win work and then resenting the client.
×Competing on price against businesses with much lower cost bases.

FAQs

How do I know if I am underpriced?

If you win nearly every quote, if clients never query price, and if margin does not fund the business properly, you are probably too cheap.

How much should I raise prices by?

Enough to matter. Small nervous increases cost the same goodwill as meaningful ones. Test on new enquiries first.

WRITTEN BY TARIQ SALLAM
Marketing Consultant. Entrepreneur. Content Creator.

I'm a marketing consultant, entrepreneur and content creator. I help businesses grow through practical marketing, websites, SEO, content and AI.

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