How do you correctly price your product or service? A comprehensive guide to pricing?

How do you correctly price your product or service? A comprehensive guide to pricing?

discover | Sunday - 15 / 02 / 2026 - 9:42 am

How can pricing policies increase company profits by 25%?

A recent study published by McKinsey in 2024 showed that well-thought-out pricing policies are among the most powerful strategies for increasing profits, as they can increase profitability by up to 25% in just one year.

According to data from PricewaterhouseCoopers (PwC), a 1% price improvement leads to an 8.7% increase in operating profits, a greater impact than any other factor.

Well-thought-out pricing policies increase profits by 25% through four key elements:

• Comprehensive cost structure: A careful analysis of direct and indirect costs to ensure a healthy profit margin.
• Perceived customer value: Measuring what customers actually value in your product compared to available alternatives, and their willingness to pay for this added value.
• Competitive Environment: Continuously monitor competitors’ prices and strategies, and analyze their potential reactions to your price changes.
• Strategic Objectives: Link pricing decisions to the company’s long-term plan, whether for rapid growth, increased market share, or enhanced profitability.

Discover the most important pricing policies to optimally price your product or service. Proven strategies increase profits by 25%.

But what are product pricing policies?

Pricing is defined as the process of determining the financial value an organization charges for providing a product or service.

Price is considered a fundamental element of the marketing mix (along with product, distribution, and promotion).

What distinguishes price from other elements of the marketing mix is that the pricing is the sole source of revenue generation, while other elements require investment and costs to achieve effectiveness.

Therefore, pricing the products and services is of exceptional importance, given its direct impact on an organization’s profitability and long-term business sustainability.

A key recommendation: Companies that review their pricing strategies every six months achieve 40% faster growth than those that review them annually.

What are the objectives of pricing?

When the management of any company or organization develops a pricing model for a product or service, it sets a set of objectives that govern the pricing process in accordance with its strategic vision. The most prominent objectives of pricing products and services include:

1. Market sustainability:

Strategic pricing aims to find an appropriate price for consumers that will encourage them to adhere to the product or service despite intense market competition. This ensures the product’s longevity and strong roots. The pricing process can then be reconsidered after a broad customer base has been established.

2. Increasing profit margin:

Every company seeks to increase its profit margin from the sale of its products or services, based on the state of supply and demand in the market and the level of competition. When supply for a particular service is high, its price is usually followed by a rise.

3. Market control:

Some companies sometimes set low prices for their products and services to control market purchases and maximize sales by increasing demand, ultimately leading to lower production costs due to economies of scale.

4. High pricing for innovative ideas:

When companies introduce an innovative idea or product to the market, they usually set a high price to cover the high production costs required to provide all these features in a single product, just as major technology companies do.

Now, let’s return to the fundamental question posed in the title of this article: How can a product or service be priced accurately and effectively?

We will review in detail the most prominent pricing strategies tested within LOGIX system, which have proven effective in achieving a balance between profitability and customer attraction. Read on for more details and valuable guidance.

Product Pricing Strategies from LOGIX for 2025:

Pricing policies within LOGIX system serve as the framework that guides pricing decisions to achieve business and financial objectives.

There are many methods for setting prices for products and services, and they vary depending on the market, the product or service offered, competition, costs, and the target group.

In this context, pricing strategies can be divided into several main types:

1. Value-based pricing strategy:

This strategy focuses on setting prices based on the value customers perceive from the product or service, rather than on the cost of production or competitors’ prices.

2. Competitive pricing:

This strategy relies on monitoring competitors’ prices and offering similar or slightly lower prices to gain a competitive advantage in the market. However, implementing this strategy requires continuous monitoring of market offers and promotional prices offered by competitors to ensure a sustainable competitive advantage.

3. Price Skimming Strategy:

This strategy is used when launching a new product. A high price is initially set, then gradually reduced over time.

4. Cost-Based Pricing Strategy:

This type of pricing in Logix system relies on adding a fixed profit margin to the total cost of producing the service or product.

5. Penetration Pricing Strategy: This strategy is the direct opposite of the skimming strategy. The product is initially offered at a low price to attract customers and gain a wider market share. Prices are then gradually increased after the product is established in the market.
6. Dynamic Pricing Strategy:

This strategy relies on flexible price adjustments based on sales timing, demand volume, or customer profile.

Excellent! You’ve already learned about the most proven and recognized pricing strategies. But as a business owner, you might be wondering: Is it necessary to study your competitors and the market before implementing these strategies?

The answer is: Yes… definitely, and I’ll explain a comprehensive methodology for understanding competitors’ pricing. Read on to learn the details.

Mastering Pricing: Competitor Pricing Methodology:

An effective pricing strategy cannot be developed without a comprehensive understanding of the competitive environment and target market. Here are the most important market-related understandings:

Step 1: Identify Competitors:

• Direct competitors: Offer similar products and services and target the same market segment.
• Indirect competitors: Offer alternative products or services that meet the same customer needs.
• Potential competitors: Companies or entities that may enter the market in the future and pose potential competition.

Step 2: Gather Data:

• Retail and wholesale prices.
• Seasonal offers and discounts.
• Pricing structures (fixed, tiered, and dynamic).
• Payment and credit terms.

Step 3: Analyze the Value Proposition:

• Product or service quality.
• Additional features and functionality.
• Customer service and technical support.
• Brand reputation.

What are the practical steps for implementing pricing strategies?

After selecting the appropriate pricing strategy, the practical implementation phase begins with developing clear and flexible pricing policies.

This phase requires establishing precise procedures for setting, reviewing, and adjusting prices in response to market changes. The most prominent of these are:

1. Designing a Flexible and Adaptive Pricing Structure:

Flexibility in the pricing structure is essential for keeping pace with market dynamics and economic shifts.

Elements of a Flexible Pricing Structure:

1. Price Ranges: Adopting price ranges rather than fixed prices to provide flexibility in adapting to customer requirements and market conditions.
2. Seasonal Pricing: Offering varying prices in line with seasons of high or low demand to stimulate sales.
3. Geographic Pricing: Applying tiered prices based on different geographic areas or markets.
4. Volume Pricing: Offering discounts on large orders to encourage larger purchases.
5. Time-Based Pricing: Offering discounted prices for early bookings or adjusting prices based on the timing of purchase.
6. Price Review and Adjustment Mechanisms:

Establishing clear mechanisms for price review is essential to maintaining competitiveness and enhancing profitability.

These mechanisms include identifying indicators that warrant price reassessment and scheduling regular reviews.

But what are the indicators for price review?

• Changes in costs of more than 5%.
• The entry of new competitors into the market.
• Significant changes in customer behavior.
• Sales targets being met earlier or later than expected.
• Major economic shifts, such as inflation or an economic recession.

3. Leveraging Technology in Price Management:

Recent technological developments provide advanced tools for accurate and efficient price management.

Statistics indicate that 85% of leading companies adopt advanced technology solutions to improve pricing management.

Logix Experts’ Tips for Successful Pricing:

Setting appropriate pricing requires a holistic approach that combines scientific analysis with a deep understanding of the market and customers.

Successful pricing of products and services is not a one-time event, but an ongoing process that requires flexibility and adaptation.

Practical Tips:

• Start by understanding your true costs and the value provided to customers.
• Don’t ignore the competitive and market context.
• Rely on data in your decision-making.
• Be flexible and ready to adapt to changes.
• Monitor results and continually refine your strategy.

Bottom Line:

Pricing is a fundamental pillar of the success of any business, as it directly impacts financial performance and profitability.

Choosing a well-thought-out pricing strategy strikes a balance between attracting customers and ensuring sustainable profits.

Start designing an effective pricing strategy with Logix now!