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 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 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 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 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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FAQs - Frequently Asked Questions About Pricing Strategy 360: Combining Cost, Competition, and Customer Value
What are the three pricing lenses in the Pricing Strategy 360 framework and what does each reveal?
Cost lens shows your price floor, competition lens shows market positioning, and value lens shows what customers will pay—together they give the full pricing picture.
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The cost lens calculates your minimum viable price by adding direct costs, indirect costs, and overhead allocation, then applying a target margin—this ensures profitability.
The competition lens reveals how your market is priced through research on direct competitors, similar products, price ranges, and positioning strategies.
The value lens assesses what customers perceive as the worth of your offering—their willingness to pay based on value delivered, which sets your price ceiling.
Using just one lens creates blind spots: cost-only pricing ignores what customers will pay, competition-only pricing may race to the bottom, and value-only pricing may ignore costs.
Why does single-lens pricing leave money on the table or lose customers?
Cost-only pricing ignores that customers may pay more, competition-only pricing may race to the bottom, and value-only pricing may ignore your actual costs.
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Cost-plus pricing ensures you cover costs but tells you nothing about market rates or customer willingness to pay—you might be profitable at $50 but customers would happily pay $80.
Competitive pricing matches the market but ignores your unique cost structure and value proposition—you might undercut competitors while losing money, or match their prices when you deliver more value.
Value-based pricing captures maximum willingness to pay but can fail if it ignores competitive dynamics or sets prices so high that competitors win on price.
Only by combining all three lenses do you get a price that's profitable (covers costs), competitive (fits the market), and optimized (captures your value).
How do you use the cost lens to set a pricing floor that protects profitability?
Calculate total direct costs, indirect costs, and overhead per unit, then add your target profit margin to determine the absolute minimum price.
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Start by identifying all direct costs that vary with each unit sold—materials, labor, shipping, and transaction fees.
Allocate indirect costs and overhead proportionally across your products or services.
Add your target profit margin to the total cost per unit to get your cost-plus price.
This price becomes your non-negotiable floor—it ensures every sale contributes to profit rather than losing money, even if competition or customer pressure pushes for lower prices.
How does the competition lens help you position your pricing within the market?
Research competitor prices to understand the market range, then choose premium, value, match, or differentiation positioning based on your strengths.
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Map out direct competitor pricing to see the market range—from the cheapest option to the most premium.
Choose your positioning: premium pricing for differentiated offerings, value pricing for cost-competitive markets, match pricing when products are similar, or differentiation pricing when your unique features justify a different tier.
The competition lens has limitations—it ignores your costs and your unique value, and blindly matching competitors can lead to a race to the bottom.
Use competitive pricing as context rather than a target: it tells you where the market is, but your final price should reflect your cost floor and value ceiling.
How do you assess customer value perception to set a pricing ceiling?
Measure the value your product delivers, assess customer willingness to pay, and price below that value to capture maximum revenue while leaving customers satisfied.
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Start by quantifying the value you deliver—time saved, revenue increased, costs reduced, or problems solved—in dollar terms when possible.
Assess customer willingness to pay through surveys, interviews, pricing experiments, and analysis of purchase behavior at different price points.
Communicate value clearly through strong value propositions, demonstrations, proof points, and customer success stories—customers can't pay for value they don't perceive.
Your value ceiling is the maximum customers will pay, and your optimal price sits somewhere below it—close enough to capture value, far enough below to keep customers feeling they got a good deal.
How do you balance all three pricing lenses into a single optimized price?
Price above your cost floor, within the competitive market range, and below your value ceiling—then optimize within that band for maximum revenue.
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Step 1: Set your floor with cost-based pricing—never go below this regardless of competitive or customer pressure.
Step 2: Set your context with competitive pricing—understand where the market sits and position yourself appropriately.
Step 3: Set your ceiling with value-based pricing—understand the maximum customers will pay based on perceived value.
Step 4: Optimize within the band between your floor and ceiling, considering your competitive position, target customer segment, and revenue goals.
The balanced price should be profitable (above cost), competitive (within market norms), and value-aligned (below perceived value)—continuously monitoring all three factors as conditions change.
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 Calculator.
Consult with professionals for advice specific to your situation.
