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7 Proven Pricing Strategies – How to Price your Product?

How to evolve a pricing strategy for your product or service? How much I should I charge for my product or service? Which are effective pricing strategies? These are the questions that are bugging the mind of entrepreneurs. So, today I am going to give answers to these questions.

Now, when it comes to pricing it’s such an important decision because it affects your marketing. Done properly, pricing could also be a marketing strategy. 

Pricing Strategy is extremely important in the business. When you are not charging enough, so let’s say, your price is too low, you’re not making a profit, you’re not making money.

When you price too high, then maybe you’re not getting customers, you’re not getting enough volume so you won’t grow.

This means that you need the right pricing strategy to run and grow your business. 

Pricing Strategies

7 Proven Pricing Strategies

#1 Price to your competition

That means to find out what your competitors are charging and then maybe you charge kind of the same.

Let’s say, they sell this product for INR 10000, then you’ll say, “Okay, I’ll sell mine for also INR 10000.”

Now, sometimes, I also see entrepreneurs what they do is they would take the average prices of the, let’s say, three top competitors, and then they would add them together and divide it up.

This strategy would be difficult especially if you are in a commodity kind of business.

 #2 Price to Pay the Bills

Price to pay the bills is a break-even strategy. It just covers your overhead, it covers your cost. In this strategy, you are not charging any profit you are paying the bills.

This strategy is generally adopted by startups. Sometimes it is also adopted to acquire a large volume of customers in the new marketplace. I also called these self-liquidating offers. 

Price to pay the bills is a low-ticket strategy. Means you price it, and want just a break even. 

#3 Price to Time

This is probably one of the most common pricing models. A lot of people do this. Lawyers, professionals, accountants, and all other service providers use this a lot.

They charge per hour or they charge per day or charge per week or charge even per month. It is like a retainer model.

Price to time works on the concept that How much time am I spending on this particular task? How much time am I spending on this project?

The price-to-time model is very, very common but this model is getting out of date. As we are now transitioning from the job economy to what I call a skilled economy, 

Now companies and people, they are paying for results. They much prefer to pay for results and not for hours.

I called this model the clock in, clock out model.

#4 Price to Cost Plus

Price to cost plus is another common model. Let me explain it with an example. Let’s say in the construction business.

For one project, project costing is fixed. Let’s say this project’s gonna cost 50 Lakh Rupee? That’s the project cost, right? And then you’ll add a 15% mark up on that. That’s fine, that’s one way to do it.

It’s very a common model. You estimate the cost or you find out the cost and add your mark-up/ profit margin. 

#5 Price to the Package 

The price to the package is a very good and powerful pricing strategy. I used this one a lot while doing business. 

I use this one a lot. It means that you are creating an offer.

You’re creating a package. Let’s say the package total cost is worth 1 Lakh. And you’re only charging your customers INR 40000 or INR 50000.

They’re only paying a fraction of what the entire value, of the package, is worth.  

There are two advantages. First of all, it makes the offer irresistible. Secondly, if you want to increase the price, all you need to do is find out how you can increase the value that you can deliver.

And I like to use a general rule of thumb and I’m giving that to you.

I call that the one to ten (1:10) Meaning for, let’s say an educational product. If you charge INR 10000, you need to deliver a value of at least 1 Lakh (10 Times) worth value. 

If you want to charge INR 20000, you need to deliver at least 2 Lakh worth of value.

Just think about how you can apply this in your business.

Versus just selling the widget, the product, whatever that you’re selling, how can you pack in a way that is attractive?

Let me give you another example.

Let’s say I started my digital marketing agency RRMediaNet and I am selling website development.

Instead of saying, “Hey, you know what, I am going to charge you INR 1000 an hour to design your website.” I will promote it as a package deal by delivering value.

I am promoting it for this website development package we are going to design – 

  • Domain Name
  • Hosting Services
  • SSL Certificate 
  • 10-page website
  • Blog 
  • 20 Landing Pages
  • 30 E-mail followups 

So that you can convert those leads into sales and increase your business.

So, it is a complete package. Now I will tell the customer that if you buy all these separately it will cost you around INR 75000 and I am going to charge just INR 30000

Now customers will not resist as we are delivering value to them at a lower cost. So it is a price-to-package strategy.  

#6 Price to Positioning

What kind of positions do you have in the marketplace? If you’re the leading authority in your marketplace, you can charge a lot more money.

Now, most people do a lot of sales but they don’t understand how to do positioning. If you don’t understand the power of positioning go through my previous article. 

Let’s try to understand this strategy by example. This strategy is based on supply and demand.

You know there are a lot of premium products out there in the marketplace, very often a lot of demand, and limited supply.

So ask yourself how you could use this to your advantage.

How could you create a lot more demand for what you do, what you offer, and what you sell? And then what you want to do is you want to restrict the supply. 

Just like the diamond industry of Surat. Do you know there’s actually a ton of diamonds that’s out there?

But the diamond industry is smart enough, they know if they flood the market with so much supply, then the value of diamonds would go down dramatically.

So they restrict the supply and drive up the demand. So diamonds become more valuable. It is a price to positioning. 

#7 Price to Value  

Price to Value is my second favorite pricing strategy. That’s how I like to pay for things as well. Price to value. If I’m paying for results, I would be more than happy to pay a premium for results.

I don’t care about time, I don’t care about effort, I care about results.

So if it’s a project and I pay a certain amount of money, the project gets done, and I’m more than happy.

Let me explain this by example. Let’s say you run a consulting firm.

You do business consulting. Instead of charging the clients for time, “I’m gonna charge you X amount of rupee per hour.” Not very compelling, not very enticing because the client’s success or failure’s got nothing to do with you.

If they get more results, they generate more revenue, they pay the same amount of money.

If they get no results, you still get paid. Well, that’s not good. That means your client’s taking on all the risk and you are getting all the rewards.

Now here you need to use price to value. Let’s say your client is doing a million dollars a year in revenue right now, that’s the base.

Now you need to showcase and share how you can increase their sales and revenue. Customers will be surely ready as you are giving them value. 

It is result based. It is value based business strategy.  

Over to you

Which pricing strategy you are using right now? Are you facing any challenges email us your queries at or and we will surely help you out?

Whatever model you are using right now. I would advise you to go for the hybrid model a combination of these models, and these strategies like price to value, price to package, and even price to positioning or sometimes price to time model. 

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment , tax, financial advice or legal opinion. Please consult a qualified financial planner and do your own due diligence before making any investment decision.
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