Top 5 Pricing Strategies for a Small Business

Start-ups must choose a pricing strategy after considering a number of factors that will ensure stronghold in the market.


Pricing is crucial for a small business mainly because it’s important to strike a balance between competitiveness and the value added by your product or service in the market. 

Showing the lowest or even the highest price among your competitors are both equally wrong approaches while introducing your product or service for the very first time in the target market.

Top 5 pricing strategies

Choose between the lowest and highest price points in the market

Two pointers which are indisputable for small businesses is one, to never choose to offer the lowest price. You can be somewhere in between the scale for your product/service/market and even close to the highest. But the lowest offering is off-limits since it can hurt a small business’s entry into the market. 

Another rule is to never establish pricing based on pricing alone. It’s important for small businesses to consider other factors while deciding price. 

Determine affordability of your customers

Compare the spending habits of your potential customer base with the value you are offering. Are your potential customers willing to shell out big bucks for the value you are providing, or do they have strict spending habits? Keeping these two as deciding factors, formulate a strategy which agrees with the customer budget while being fair and profitable for what you have to offer. 

Informed decision-making

Informed choices must motivate your decision making while settling on a suitable pricing model. Being informed and aware of your own challenges, the targets you need to meet and the financial commitments you need to fulfil are foundational in choosing a strategy. 

Choose from existing pricing models

There are several existing pricing models to choose from which small businesses have utilised successfully in the past like Cost-plus, value-based, penetration pricing, price skimming, and competitive pricing. These are tried and tested models which your small business can choose from after deciding what’s best for your business.

Small businesses should not be desperate to gain permanent hold of the market share since this can also hurt them. Instead of engaging in a constant pricing battle for getting a firm grip on the market share, small businesses can instead focus on building brand reputation and adding value to the market through unique products/services after in-depth market research. 

Perform regular in-depth market research

The last and best strategy for coming up with the perfect pricing model is to perform regular and deep market research right from the moment you sit down to set prices for your products and services.

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Formulate a pricing strategy which agrees with the customer budget while being fair and profitable for what you have to offer.

What’s in it for me?

If we have to pick the top 5 strategies for small businesses, it would be the pricing models mentioned above. However, choosing a pricing model is not as simple as picking one from a list. 

It depends on various factors, the nature of your business, what competitors are doing to some extent, and most importantly on the market. 

Two mistakes small businesses can make is to focus only on pricing and to aggressively battle it out with competitors for pricing. Start-ups and small businesses should instead be immersed in creating the best they have to offer while nurturing a reputable brand name and make an unshakeable place for themselves in the market. 

Anju Nambiar
Anju Nambiar
Anju has 5 years of experience covering business. She writes on startups, business life cycle and startup ecosystem. Her stints include Amazon and Adjetter Media Network.

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