What Are Product Pricing Methods? A Basic Guide In 2021


Pricing methods, the least focused but most crucial element, is a versatile element for a business, either online or offline. It is a separate dimension that needs special focus by a start-up to keep its business running and holds its position in the market. With the sharp growth of smartphone users worldwide, there is also a gigantic demand for online markets. The best is advertised, and most has been showing multiple times on the mobile screen, more the product sells. But what could be the next step? How to decide Price?

Here, up to this stage, every new bee can easily run smoothly, but when points come for deciding the best price, they lack behind because of their lack of preparation and research. Don’t worry! Product Pricing Strategies and various Pricing methods come as a saviour for you. 

  1. Product Pricing Methods
  2. Product Pricing based on Market Position
  3. Product Pricing strategy – Gotchas to avoid

1. Product Pricing Methods

These Pricing methods and strategies could help in saving a person’s business, specially a start-up, to gain their profits without compromising with the product quality and falling under the hands of debt and loans. It is a successful roadmap that had been accepted after doing various analytical as well as statistical calculations in terms of the requirements of the business. The ultimate pricing objective is to make a balance between the profits and debts and not to compromise with the quality as it has a long-term effect on your enterprise. Product strategies can either be cost-effective or value-based. It totally depends upon the owner.

For taking instance, for the cost-based pricing example, the price of a trouser which you want to sell is $1000 to you. This price includes all the costs that have been involved in making this trouser, and it’s material which is used, its stitching cost and every other cost one can bear. So, even if you had spent some dollars in advertising on billboards or on some online websites like Myntra or amazon, even those marketing costs are included in this.

As a seller, you can decide to add a percentage on top of this $1000 cost, say 50% of the total costs. The added benefit like customer favorability towards the colour of $500 will then be your profit. 

Apple or Starbucks are the most favourable Value-based pricing example.

2. Product Pricing based on Market Position

There are different pricing methods and Pricing techniques been provided by various websites. But some of the key fundamental areas on which one need to focus on are: 

  1. Competitive Pricing
  2. Cost Plus Pricing
  3. Markup Pricing
  4. Demand Pricing
  5. Pricing nearby to the consumer’s need and your pocket approach

These are some of the pricing techniques. When you create a product, you’re often not the one selling it directly to customers. Customers are often getting it from resellers who buy from distributors. Each step along the chain between the producer and the consumer takes a cut of the money that eventually comes from the customer. 

3. Product Pricing strategy – Gotchas to avoid

While the Businesses are totally a roller coaster ride, there are always be some ups and downs. It is normal for one to face losses in a few deals, but if one constantly faces sudden price loss, there is something to be checked. Majorly, this issue occurs because of poor product pricing strategies. Therefore, one must be conscious about choosing and relying on any strategy related to the pricing of the product. here are a few suggestions for the readers to keep in mind while choosing Different pricing methods.

  • When you are feeling confident about your product pricing approach, you just need a helping hand at that moment in time. Don’t be hesitant about a few expenses because these expenses one day provide you with big returns. It would have been more dangerous to proceed with this doubt on your own strategy.
  • In the beginning, do not increase the prices too much, reaching to the sky. For example, if you are selling a trouser for $30000, then it might have something extraordinary than other trousers selling ranging from around $300. Hence, keep the pricing grounded. 
  • Avoid increasing pricing in very short durations likewise within a few days or months of the product launch. It’s virtually impossible to raise your price after the product has been released. 
  • Most pricing decisions are based on your inner thoughts and thinking. Some of these inner feelings usually come with experience or hereditary. So without neglecting these, one must try to shape this thinking to get ahead of the other competitors.


In this article, we have been able to discuss the various pricing methods, pricing strategies, Pricing objective, Pricing strategies examples, Types of product methods, Cost-based pricing example, Value-based pricing example, and some of the key points to be placed in mind before deciding the Product pricing.

Interested to learn all about Product Management from the best minds in the industry? Check out our Product Management Course. This 6-month-long program takes place online through live instructor-led sessions. It is the only program in India that offers the ‘Bring Your Own Product (BYOP)’ feature so that learners can build their product idea into a full-blown product, and go through an entire Product Development lifecycle. Not only this, but this is the only program in India with a curriculum that conforms to the 5i Framework. Post completion, learners receive a joint certification from the Indian Institute of Management, Indore, and Jigsaw Academy. 


Related Articles

Please wait while your application is being created.
Request Callback