🧩 Frameworks

Pricing strategy

Three ways to set a price: cost, competitors, or value.

Cost-plus pricing adds a margin to your cost. Competitor-based pricing benchmarks rivals. Value-based pricing charges what the product is worth to the customer.

Good answers triangulate all three: cost sets the floor, value sets the ceiling, competitors show where you can sit.

How to break it down

Price
Cost (floor)
Competitors (anchor)
Customer value (ceiling)

🧮 Example

A B2B software tool saves a client ₹10 lakh a year; it costs ₹1 lakh to serve; rivals charge ₹3 lakh → price around ₹3–4 lakh.

🎯 Interview tip

Always mention the customer's willingness to pay — it's what interviewers look for.

Used in

Marketing casesProduct Strategy casesConsulting cases

Learn next

The 4Ps (marketing mix)

Product, Price, Place, Promotion.

Contribution margin

What each extra unit adds towards covering fixed costs.

ARPU

Average revenue per user.

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