10 Best Pricing Strategy for Startups & Entrepreneurs

pricing strategy

10 Best Pricing Strategy for Startups & Entrepreneurs

As a startup or entrepreneur, pricing can be one of the most challenging decisions you have to make. You don’t want to price too low and miss out on revenue, but you also don’t want to price too high and risk alienating customers.

Pricing is an art, not a science. There is no one-size-fits-all solution here. But by using the right pricing strategy, you can ensure that you get maximum value for your product or service while still meeting customer needs.

Here, we’ll explore 10 of the best pricing strategies for startups and entrepreneurs, so you can make sure you’re getting the most bang for your buck.

Why pricing is important

Pricing is important for startups and entrepreneurs for a number of reasons. First, pricing can be a key differentiator for your product or service.

If you price too low, you may be perceived as a lower quality option. Conversely, if you price too high, you may not be able to attract customers.

Second, pricing can have a significant impact on your margins and profitability. If you’re not careful, you can erode your profits by discounting your prices too heavily or by charging too much.

Third, pricing can affect your cash flow. If you price too low, you may find it difficult to generate the revenue you need to sustain your business.

On the other hand, if you price too high, you may find it difficult to generate the sales volume necessary to cover your costs.

Lastly, pricing can impact your ability to scale your business. If you’re not generating enough revenue per customer, it will be difficult to invest in growth initiatives.

Conversely, if your prices are too high, you may find it difficult to expand into new markets or offer new products and services.

Why startups need a pricing strategy?

When it comes to pricing strategy, there are a lot of factors to consider for startups and entrepreneurs.

The most important factor is making sure your prices are aligned with your business goals. If you want to grow your startup quickly, you need to make sure your prices allow for that growth.

For example, if you’re selling a product or service that has high marginal costs, you’ll need to charge a higher price to make a profit.

On the other hand, if you have a product or service with low marginal costs, you can charge a lower price and still make a profit.

Another important factor to consider is your competition. What are they charging for similar products or services?

If you want to attract customers away from your competitors, you’ll need to offer a competitive price. But be careful not to undercut yourself – if your prices are too low, customers may perceive your product or service as being of lower quality.

Finally, consider what kind of pricing strategy will work best for your startup. There’s no one-size-fits-all answer here – it depends on factors like your industry, target market, and the type of product or service you’re offering.

For example, subscription-based pricing might work well for a software-as-a-service company targeting businesses, while pay-per-use pricing could work better for a consumer app with low marginal costs.

How to price your product or service

If you’re a startup or entrepreneur, pricing your product or service can be tricky. You want to make sure you’re not undervalued, but you also don’t want to price yourself out of the market. So how do you find the sweet spot?

There are a few things you’ll need to take into account when pricing your product or service, including your costs, the competition, and what the market is willing to pay.

Once you have a good understanding of all of these factors, you can start to formulate a pricing strategy that makes sense for your business.

Here are a few tips for pricing your product or service:

Know Your Costs: Before you can start setting prices, you need to know how much it costs to produce your product or deliver your service. 

This includes both direct and indirect costs. Direct costs are those that are directly associated with producing your product or delivering your service, such as materials and labor.

Indirect costs are overhead expenses that aren’t directly tied to production, such as rent and marketing.

Research the Competition: It’s important to know what other businesses in your industry are charging for their products or services. 

This will give you an idea of what the market is willing to pay and help you determine if there’s room for price flexibility.

Consider Value-Based Pricing: Instead of simply looking at cost and competition when setting prices, consider value-based pricing as well. 

This means you’ll calculate what your product or service is worth to the customer, rather than simply looking at the cost of production.

Test and Adjust Prices: Once you’ve set a price, it’s a good idea to test it out on a small scale before rolling it out across your entire product line or service offering. This will give you an opportunity to see how customers react and adjust if necessary.

Consider Discounts and Special Offers: Discounts and special offers can be an effective way to attract new customers and increase sales.

When done right, they can also help boost profits. Just make sure that any discounts or deals you offer are in line with your overall pricing strategy.

The 10 best pricing strategies for startups

Pricing is one of the most important aspects of any business, but it can be especially challenging for startups.

There are a number of different pricing strategies that can be effective for startups, depending on the product or service being offered and the business model.

1. Cost-plus pricing:

This approach involves setting prices based on the costs associated with producing the product or service, plus a desired profit margin. This is a common approach for businesses selling physical goods.

2. Value-based pricing:

With this strategy, prices are set based on the perceived value of the product or service to the customer. This approach can be effective for businesses selling unique or innovative products or services.

3. Competition-based pricing:

In this case, prices are set based on what competing businesses are charging for similar products or services. This is a common approach in markets where there is significant competition.

4. Penetration pricing:

This strategy involves setting lower prices when launching a new product or service in order to attract customers and build market share.

Prices may be raised once the product or service has achieved some level of success and market penetration has been achieved.

5. Skimming pricing:

The opposite of penetration pricing, skimming involves setting higher prices when launching a new product or service in order to maximize profits early on. Prices may be lowered later as demand decreases and competition enters the market.

6. Bundling pricing:

This approach involves offering multiple products or services as a package at a discounted rate. This can be a great way to encourage customers to purchase multiple items and increase sales.

7. Freemium pricing:

With this strategy, basic versions of products or services are offered for free with the option to upgrade to premium versions for a fee. This is a popular approach for software companies and other digital businesses.

8. Dynamic pricing:

This approach involves changing prices based on market conditions or customer behavior in order to maximize profits.

This is often used by online retailers who can take advantage of real-time data on customer demand and supply levels.

9. Loss leader pricing:

Here, some products or services are offered at a loss in order to attract customers and drive sales of higher-margin items. 

This is often used by supermarkets, who sell some items below cost in order to get customers into the store where they will buy more expensive items as well.

10. Subscription pricing:

Many businesses now offer customers the option of subscribing for regular deliveries or access to certain products or services at discounted rates compared to buying them individually each time.

How to choose the right pricing strategy for your business

When it comes to choosing a pricing strategy for your business, there are a few things you need to take into account.

First of all, what are your goals? What do you want to achieve with your pricing strategy? Are you looking to increase sales, or simply cover costs?

Once you know what your goals are, you can start to look at the different pricing strategies available and see which one will work best for your business.

For example, if you’re looking to increase sales, a penetrative pricing strategy may be best. This involves setting low prices in order to attract more customers.

However, if you’re trying to cover costs and make a profit, a skimming pricing strategy may be more appropriate. This involves setting high prices in order to make the most profit from each sale.

There are many other factors to consider when choosing a pricing strategy, but these are two of the most important.

Ultimately, the right pricing strategy for your business will depend on your specific goals and objectives.


Finding the right pricing strategy for your startup can be a challenge, but with so many options to choose from, there’s sure to be one that fits your business.

We hope this article has helped you identify some of the best pricing strategies for startups and entrepreneurs and given you some insights into how to develop a successful pricing structure for your own venture.

With the right combination of research, experimentation and customer feedback, you can find an effective way to monetize your products or services – good luck!

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