![]() ![]() Netflix entered a market where DVD rentals were the norm. Netflix is an excellent example of how a business can use the penetration pricing strategy. A word of caution: low prices can cause losses, so this is not a long-term strategy. This strategy can help gain a stronghold in a new and competitive market. It involves pricing your product lowest as compared to competitors. Penetration pricing strategy is usually used by new entrants in the market. This in turn can lead to missed revenue opportunities. ![]() While this pricing strategy is fairly simple and may keep you afloat in a competitive market, it also means that you have minimal control over deciding and experimenting with pricing. You can price your product higher, lower, or at par with the competition. This strategy only considers the publicly available information about your competitors’ pricing and does not consider factors like market demand or production costs. Just as the name suggests, the competitor-based pricing strategy depends on that of your competitors. Let’s look at some of the popular pricing strategies. Various moving parts contribute to pricing strategies, including competitors’ pricing, costs, and expenses. Pricing strategies are methods used to determine the pricing of the product or service. In this guide, we will talk about various SaaS pricing strategies, different types of SaaS pricing models, and the metrics to track the performance of your pricing model. “#1 tip for pricing strategy is to treat it as an experiment.,” says Yoav Shapira, Director Of Engineering at Facebook. As a growing SaaS business, if you’re not giving your pricing strategy a serious thought and often, you’re leaving money on the table. ![]()
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