A pricing strategy is the method you use to set and change your prices, plus the reasoning behind it. Cost-plus, value-based, and competitor-based are the three common methods. The strategy covers the list price, discounts, packages, and the timing of increases. It is not a single number on a page.
Start by picking the method that fits what you sell. Cost-plus suits products with clear unit costs. Value-based suits services and software, where the customer's saving is measurable. Competitor-based suits crowded markets with comparable products, and it usually produces thin margins.
An example. Your unit cost is 12 euros. Cost-plus with a 60 percent markup gives 19.20 euros. Now look at value: the product saves a customer five hours a month, and that customer's hour costs 30 euros, so the saving is 150 euros a month. Against that, a price of 39 euros is defensible, and the cost-plus price left almost 20 euros per unit on the table.
The mistake almost every founder makes is pricing too low out of fear. Run the numbers first. Say you sell 1,000 units a month at 20 euros: revenue is 20,000 euros, and at 12 euros unit cost your contribution is 8,000 euros. Raise the price to 22 euros and lose 10 percent of volume. You then sell 900 units for 19,800 euros, your product costs are 10,800 euros, and contribution is 9,000 euros. Revenue fell, profit rose by 1,000 euros.
The second mistake is treating the price as fixed forever. Your strategy should state when you review prices, what a discount requires, and which package you push. When a customer asks why the price is 39 and not 19, the answer should describe their saving, not your costs.
