Most businesses price from one angle. They focus on costs. Or competition. Or value. But pricing requires all three.
Single-lens pricing creates problems. You leave money on the table. You price yourself out. You miss opportunities.
Pricing Strategy 360 combines cost, competition, and customer value. It uses all three lenses. It creates balanced pricing. It maximizes revenue.
This guide shows you how to combine all three pricing approaches into one strategy.
Key Takeaways
- Understand cost lens—know your cost structure
- Analyze competition—study competitor pricing
- Assess customer value—measure value perception
- Balance approaches—combine all three lenses
- Optimize pricing—maximize revenue potential
Table of Contents
The Three Lenses
Pricing has three lenses. Each shows different information. Together they show the full picture.
Cost lens shows what you need to charge. It sets the floor. It ensures profitability.
Competition lens shows market positioning. It reveals opportunities. It prevents mispricing.
Value lens shows what customers will pay. It sets the ceiling. It captures maximum value.
Why this matters: Single-lens pricing misses information. If you use all three lenses, you see the full picture.
Cost-Based Pricing
Cost-based pricing starts with your costs. It adds margin. It sets minimum price.
Cost Calculation
Calculate total costs:
- Direct costs
- Indirect costs
- Overhead allocation
- Total cost per unit
Why this matters: Cost calculation shows minimum price. If you calculate costs, you see minimum price.
Margin Addition
Add desired margin:
- Target profit margin
- Margin percentage
- Final cost-plus price
Why this matters: Margin addition ensures profitability. If you add margin, profitability improves.
Cost-Plus Limitations
Understand limitations:
- Ignores competition
- Ignores value perception
- May price too low or too high
Why this matters: Limitation understanding prevents mistakes. If you understand limitations, mistakes decrease.
Pro tip: Use our TAM SAM SOM Calculator to evaluate market opportunity and inform pricing decisions. Calculate market size to understand pricing context.
Competitive Pricing
Competitive pricing studies market prices. It positions relative to competitors. It finds pricing opportunities.
Market Research
Research competitor prices:
- Direct competitors
- Similar products
- Market price ranges
- Price positioning
Why this matters: Market research shows positioning. If you research market, you see positioning.
Positioning Strategy
Choose positioning:
- Premium pricing
- Value pricing
- Match pricing
- Differentiation pricing
Why this matters: Positioning strategy creates market position. If you choose positioning, market position improves.
Competitive Limitations
Understand limitations:
- Ignores costs
- Ignores value
- May race to bottom
Why this matters: Limitation understanding prevents mistakes. If you understand limitations, mistakes decrease.
Value-Based Pricing
Value-based pricing starts with customer value. It prices based on value delivered. It captures maximum value.
Value Assessment
Assess customer value:
- Value delivered
- Value perception
- Willingness to pay
- Value metrics
Why this matters: Value assessment shows maximum price. If you assess value, you see maximum price.
Value Communication
Communicate value clearly:
- Value proposition
- Value demonstration
- Value proof
- Value stories
Why this matters: Value communication enables higher prices. If you communicate value, higher prices become possible.
Value-Based Limitations
Understand limitations:
- Requires value research
- May price too high
- Ignores competition
Why this matters: Limitation understanding prevents mistakes. If you understand limitations, mistakes decrease.
Combining Approaches
Combine all three lenses. Use each for what it does best.
Cost Sets Floor
Use cost to set minimum:
- Calculate cost-plus price
- Set as minimum
- Never price below
Why this matters: Cost floor protects profitability. If you set cost floor, profitability protects.
Competition Sets Context
Use competition to set context:
- Research market prices
- Understand positioning
- Find opportunities
Why this matters: Competition context shows market reality. If you use competition context, market reality becomes clear.
Value Sets Ceiling
Use value to set maximum:
- Assess customer value
- Set as maximum
- Price below value
Why this matters: Value ceiling captures maximum revenue. If you set value ceiling, maximum revenue becomes possible.
Balanced Pricing
Balance all three:
- Price above cost
- Price within market range
- Price below value
- Optimize for revenue
Why this matters: Balanced pricing maximizes revenue. If you balance pricing, revenue maximizes.
Pro tip: Use our TAM SAM SOM Calculator to evaluate market opportunity and inform pricing decisions. Calculate market size to understand pricing context.
Your Next Steps
Pricing Strategy 360 enables balanced pricing. Understand cost lens, analyze competition, assess customer value, then balance approaches to maximize revenue.
This Week:
- Begin calculating cost-based pricing using our TAM SAM SOM Calculator
- Start researching competitor pricing
- Begin assessing customer value
- Start combining all three approaches
This Month:
- Complete cost calculation
- Finish competitive research
- Complete value assessment
- Create balanced pricing strategy
Going Forward:
- Continuously monitor costs, competition, and value
- Adjust pricing as conditions change
- Optimize pricing for revenue
- Maintain balanced approach
Need help? Check out our TAM SAM SOM Calculator for market evaluation, our discount strategy guide for pricing tactics, our tiered pricing guide for packaging, and our price increase guide for implementation.
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Sources & Additional Information
This guide provides general information about pricing strategy. Your specific situation may require different considerations.
For market size analysis, see our TAM SAM SOM Calculator.
Consult with professionals for advice specific to your situation.
