Pricing strategies: how to set the right price

What is a pricing strategy?

A pricing strategy is the set of decisions and rules that enable a company to determine, structure and develop its prices in a way that is consistent with its business objectives.

Unlike a price set at random or purely in response to the market, it is based on a considered and structured approach, taking into account costs, perceived value and the competitive environment.

The role of pricing strategy

A pricing strategy aims to strike a sustainable balance between several dimensions:

• Profitability: ensure sufficient margins to cover costs, finance growth and secure financial health.

• Demand: offer a price that is acceptable to the target customer, taking into account their price sensitivity.

• Competition: positioning yourself consistently in relation to existing offerings, without suffering a price war.

• The positioning: translating the company's level of range, expertise or differentiation through price.

Price then becomes a strategic tool, in the same way as product, service or customer experience.

Spot prices vs. pricing policy: what's the difference?

It is important to distinguish between two concepts that are often confused:

• One-off pricing corresponds to an amount set for a specific offer at a given time. It may be opportunistic, temporary or unstructured.

• The pricing policy, resulting from a pricing strategy, defines an overall framework: setting rules, possible adjustments, segmentation, changes over time.

A successful company does more than just set one-off prices. It relies on a clear and coherent pricing policy that can evolve with the market while protecting its profitability.

What are the main pricing strategies?

1. The penetration strategy

The penetration strategy consists of setting a deliberately low price in order to enter a market quickly, attract price-sensitive customers and gain market share. It facilitates customer acquisition, accelerates sales volume and often makes it possible to make a name for oneself quickly, particularly when launching a product or entering a competitive market.

On the other hand, a low price significantly reduces margins and can weaken cash flow if the expected volume is not achieved. This strategy also makes future price increases more difficult for customers to accept. It is therefore best suited to launch phases, highly competitive markets or situations where the priority is to win new customers quickly.

2. Skimming strategy

The skimming strategy consists of launching a product or service at a high price, in order to target customers who are prepared to pay more for innovation, rarity or added value. This approach makes it possible to generate high margins from the outset, and to enhance the image of the product or service as top-of-the-range or expert.

To work, skimming requires strong differentiation, high credibility and clearly identifiable perceived value. Without these, the high price becomes a disincentive to purchase.

3. Value-based pricing

Value-based pricing is not based solely on production costs, but on the value perceived by the customer and the real impact of the offering. It is particularly well suited to professional services, expert solutions and high added-value offerings, where the customer benefit far exceeds the production cost.

This strategy requires an excellent understanding of customer expectations and a clear message to justify the price. Without a demonstration of value, it becomes difficult to sustain.

4. Competitive alignment

Competitive alignment consists of setting prices with reference to those on the market, by consciously choosing to align, to offer a lower price or to position oneself above them. This approach makes it easier for customers to understand our offering and reduces the risk of our prices falling too far behind the market.

Beware, however, as over-reliance on competition can lead to price wars, margin erosion and a loss of differentiation.

5. Dynamic pricing

Dynamic pricing is based on adjusting prices according to demand, customer behaviour, stocks or the economic context. It relies on real-time data, technological tools and key indicators such as conversion rates, demand and availability.

This strategy is common in e-commerce, transport, tourism and digital platforms, but remains more complex to deploy in traditional structures.

6. Cost-plus

The cost mark-up consists of adding a fixed margin to the cost price to determine the selling price.

While this method ensures that costs are covered, it often ignores perceived value and market reality. Used alone, it can lead to poorly positioned prices.

Which pricing strategy is right for you?

Depending on your main objective

Maximising profitability

When the priority is to improve profitability, the strategy should focus on margin rather than volume.

Approaches based on perceived value, premium positioning or cream-skimming are particularly effective, as they enable more value to be captured per sale, without proportionately increasing costs.

Gaining market share

If the objective is rapid growth or the conquest of a competitive market, strategies such as penetration or certain premium prices may be relevant.

They facilitate the acquisition of customers, but must be strictly controlled to avoid a lasting deterioration in margins.

Launching a product or service

During a launch, the price of a product or service is decisive in the initial perception of the offering.

A skimming strategy is suitable for innovative or differentiating products, while a penetration strategy may be appropriate if the main challenge is awareness and rapid adoption.

Building customer loyalty

Consistency and price stability are essential to strengthening loyalty.

Strategies such as differentiated pricing, progressive benefits or a clear pricing policy encourage trust and long-term relationships, which are often more profitable than constantly acquiring new customers.

Depending on your type of business

SMES

SMEs are generally looking for a balance between profitability and simplicity. The cost mark-up can be used as a basis, but it needs to be complemented by an analysis of perceived value and the market to avoid over-rigid pricing.

Professional services

In services, value-based pricing is often the most relevant. The price should reflect the expertise, impact and value created for the customer, rather than just the time spent. Differentiated pricing according to mandate or service level is also common.

B2B

In B2B, combined strategies are common. Differentiated pricing according to volume, customer relationship or length of commitment makes it possible to optimise profitability while remaining competitive. The logic of value and partnership is central.

E-commerce

E-commerce lends itself more to dynamic pricing and competitive alignment. Rapid adjustments based on demand, stocks and customer behaviour can optimise sales, provided that precise indicators are monitored.

Is it possible to combine several pricing strategies?

Yes, it is entirely possible (and often appropriate) to combine several pricing strategies, provided you do so in a structured and coherent way.

To do this, you must :

- Know precisely your cost price and your minimum margins.

- Clearly define the objectives associated with each strategy.

- Ensure overall consistency to avoid confusion among customers.

Examples of possible combinations

Certain combinations of strategies are particularly common and effective:

Value-based pricing + differentiated pricing

A company can set its prices according to perceived value, while adapting its rates according to the type of customer, volume or level of service.

Skimming at launch + competitive alignment thereafter

An innovative product can be launched at a high price, then gradually adjusted to reach a wider market once it is well known.

Call-up price + premium offer

An attractively priced entry-level offer attracts customers, while more profitable complementary services ensure overall performance.

Cost-plus internally + perceived value for customers

The cost price serves as a security base, but the final price is adjusted according to the market and the value delivered.