Strategic Marketing Science provides nine different strategies for Pricing based on product quality (see below). The reality is sometimes Strategic Pricing is contextual to competitive pricing or other uncontrollable factors. Organisational resources, marketing effort, and budget also play in selecting the best Pricing Strategy. Advanced pricing strategy is about advanced marketing management: Real-time, for each individual segment!
Value-based pricing uses buyers’ perceptions of value, not the seller’s cost, as the key to pricing. For many industrial products, the costs perceived by customers extend well beyond the price charged.
An industrial purchaser perceives the cost of equipment as including installation, maintenance, training and use of consumables, as well as the basic purchase price.
Equipment purchases are evaluated over their economic lives and comparisons between competitors go beyond straight price assessment. The company bases its price largely on competitors’ prices, with less attention paid to its own costs or demand.
In oligopolistic industries that sell a commodity such as steel, paper or fertiliser, companies normally charge the same price. The smaller firms follow the leader: they change their prices when the market leader’s prices change, rather than when their own demand or cost changes. If you have read this far, you are probably ready to engage a pricing strategy marketing consultant. Remember, "Procrastination is the thief of time" and the sooner you act, the sooner you'll achieve your goals! Yet for many B2B marketers, the pricing strategy in their marketing plan is challenging to write; many aren’t even involved in creating their pricing strategy. There are many factors to consider when developing your pricing strategy, both short- and long-term. Note: You can access guided pricing strategy templates and step-by-step instructions for writing the pricing strategy section of your marketing plan in our marketing planning and management app. When you offer a truly unique product or service with little direct competition, it can be challenging to establish your price. When your price, value proposition and positioning are aligned, you’re in the best situation to maximize revenue and profits. Company C regularly evaluates their competitors’ prices to make sure they’re delivering on their promise. However, if there isn’t a strong market for prestige, this strategy may be the best one for the company long-term.


If Company B charges a premium price for an average product, they’ll have a very difficult time generating interest in their it. Yet Company B may be able to implement a small price increase to raise revenue and profits; it depends how much more its customers are willing to spend. By analyzing price sensitivity and testing different prices, they can evaluate the strength and potential of this new strategy. If Company C’s prices rise in relation to those of their competitors, sales will plummet – their market is shopping on price, not factors like product leadership or customer intimacy.
If Company C cannot maintain its operational efficiency and cost leadership, it will need to develop new products or markets for its existing product.
Their pricing is typically 15% above the competition – they’re the most expensive product in their class.
Their demand curve is relatively inelastic, meaning that their market isn’t that sensitive to price. Much of that results from the carefully selected positioning and branding over the past five years. When they’re behind their sales targets, individual reps are given the green light to discount if needed to meet their sales quotas. Management doesn’t want to get in a price war, but is willing to ensure that they hit their short-term numbers.
Management knows that they could spend more in R&D to differentiate their offering and have greater pricing power, but they haven’t yet committed the budget to do so. The quality of their offering suffers, and they end up providing mediocre service for both markets. By lowering the price of their “prestige” brand to access a new market, Company C has increased its revenue, while reducing its profit margin and damaging its brand. Create a free account in our marketing planning and management web app for step-by-step guidance. It’s best to define your positioning, create your brand strategy, and identify your distribution channels before you develop your pricing strategy in the marketing plan.
For example, if your method for delivering value is product leadership, you shouldn’t discount heavily or compete on price; you should also minimize pricing conflicts with any channel partners. Your price sends a strong message to your market – it needs to be consistent with the value you’re delivering.
If your value proposition is operational efficiency, then your price needs to be extremely competitive.
If your value proposition is product leadership or customer intimacy, a low price sends the wrong message. Estimate how sensitive your customers are to fluctuations – it will help you determine the right price and volume combination.


Once you’ve finalized your pricing strategy in the marketing plan, it’s time to design your marketing campaigns. The Marketing MO planning app is your behind-the-scenes Chief Marketing Officer, a comprehensive resource that will improve your overall business, whether it’s a consulting practice, start up, or mid-size company.
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Their clients are buying the best expertise they can find, and they’re less sensitive to price because they care most about getting top talent. There’s a lot of competition and their product is only slightly better than the alternatives.
They regularly review the market, run promotions, and adjust prices to maintain their competitive position. Their value proposition is operational excellence and they consistently deliver the same product at a better price.
They hire more consultants, but since they’re charging less per hour, they can’t afford the same top-tier talent. By doing so, you’ll ensure that your pricing reflects your value and reinforces your brand. If you’re perceived as a commodity, you must either change the market’s perception via a new positioning strategy, or compete on price and focus on innovating to keep costs low so you can still make a profit. You’ll be far more effective when considering discount promotions – you’ll know exactly how low you can go and still be profitable. If your value proposition is operational efficiency, evaluate your competitors on a regular basis to ensure that you’re continually competitive. When tackling any new marketing task, have confidence that we have your back – with the structure and detail you need to get things done right. Following is a table with some guidance on which costs you should consider for different decisions you would like to make.
If they’re extremely sensitive, you may be better off at a much lower price with substantially greater volume.
Value based segmentation techniques talks about defining segmentation based on value placed by customers on the product.



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