/biz-pricing-strategy

name: "\"biz-pricing-strategy\""
description: "\"Analyze and design pricing strategies including cost-plus, value-based, competitive, penetration, and skimming approaches with psychological pricing techniques. Use this skill when the user needs to set or change prices, evaluate pricing models, understand price elasticity, or apply psychological pricing — even if they say 'how much should we charge', 'are we priced right', or 'our margins are too low'.\"."
allowed-tools: Read, Glob, Grep

Pricing Strategy

Overview

Pricing is the only marketing mix element that generates revenue — all others are costs. This skill covers five pricing approaches (cost-plus, value-based, competitive, penetration, skimming) plus psychological pricing techniques. The right approach depends on the product lifecycle stage, competitive landscape, and customer price sensitivity.

When to Use

**Trigger conditions:**

• User setting prices for a new product
• User evaluating whether current pricing is optimal
• User asks "how much should we charge?" or "why are our margins low?"
• User needs to choose between pricing models (subscription vs one-time, freemium vs premium)

**When NOT to use:**

• For comprehensive financial analysis → use financial ratios or DCF
• For customer segmentation → use STP
• For cost structure analysis → use Value Chain

Framework

IRON LAW: Price Communicates Positioning

Price is not just economics — it's a signal. Lowering price to compete
can permanently reposition a brand as "cheap." Raising price without
value justification creates distrust.

Every price change must be evaluated through BOTH a financial lens
(margins, volume) AND a positioning lens (what does this price say about us?).

Step 1: Understand the Three Price Anchors

Every pricing decision sits between three constraints:

| Anchor | What It Sets | Method | |--------|-------------|--------| | **Cost floor** | Minimum viable price | Cost analysis — below this, you lose money | | **Competitor reference** | Market expectations | Competitive benchmarking — what alternatives cost | | **Customer ceiling** | Maximum willingness to pay | Value research — what the customer thinks it's worth |

Step 2: Choose a Pricing Approach

| Approach | How It Works | Best When | |----------|-------------|-----------| | **Cost-Plus** | Cost + fixed margin % | Commodity products, government contracts, stable costs | | **Value-Based** | Price based on customer's perceived value | Differentiated products, strong brand, measurable customer benefit | | **Competitive** | Match or undercut competitor prices | Undifferentiated market, price-sensitive customers | | **Penetration** | Start low to gain market share, raise later | New market entry, network effects, high switching costs | | **Skimming** | Start high, lower over time | Innovation leader, early adopters willing to pay premium |

Step 3: Apply Psychological Pricing Techniques

| Technique | How It Works | Example | |-----------|-------------|---------| | **Charm pricing** | End in 9 or 99 | NT$299 instead of NT$300 | | **Anchoring** | Show a higher price first, then the actual price | "Was NT$1,200, now NT$799" | | **Decoy effect** | Offer three options where the middle is the intended choice | Small NT$99, Medium NT$149, Large NT$159 (Large looks like a deal) | | **Bundle pricing** | Combine products at a discount vs individual purchase | "All 3 for NT$999" (vs NT$450 each) | | **Freemium** | Free basic tier, charge for premium features | Spotify, Notion, Canva |

Step 4: Validate with Price Sensitivity Analysis

Before committing:

• **Van Westendorp**: Survey-based method — ask customers "at what price is this too expensive / too cheap / a bargain / getting expensive?"
• **Gabor-Granger**: Show a price, ask if they'd buy. Vary the price across respondents.
• **A/B test**: If possible, test two price points with real transactions

Step 5: Monitor and Adjust

After launch:

• Track **price elasticity**: % change in demand / % change in price
• Monitor **competitive response**: Did competitors match your price?
• Watch **customer perception**: Did the price signal what you intended?

Output Format

# Pricing Strategy: {Product/Service}

## Three Anchors
- Cost floor: {$X} (based on: {cost breakdown})
- Competitor reference: {$X range} (competitors: {list})
- Customer ceiling: {$X} (based on: {value metric})

## Recommended Approach
**{Approach name}** — {rationale}

## Price Point
- Recommended price: {$X}
- Expected margin: {X%}
- Positioning signal: {what this price says about the brand}

## Psychological Techniques Applied
- {technique}: {how applied}

## Sensitivity Analysis
| Price Point | Est. Volume | Revenue | Margin | Risk |
|------------|------------|---------|--------|------|
| {low} | {high vol} | {$X} | {X%} | {positioning risk} |
| {recommended} | {med vol} | {$X} | {X%} | {balanced} |
| {high} | {low vol} | {$X} | {X%} | {volume risk} |

## Monitoring Plan
- Review frequency: {monthly/quarterly}
- Key metrics: {elasticity, competitive response, perception}

Examples

Correct Application

**Scenario:** Pricing a new SaaS project management tool for SMBs in Taiwan

**Three anchors:**

• Cost floor: NT$150/user/month (server + support costs)
• Competitors: Asana NT$350/user, Monday.com NT$300/user, Trello Free-NT$170/user
• Customer ceiling: NT$400/user (based on 30 customer interviews — value of time saved)

**Approach**: Value-based with decoy pricing

• Basic: NT$199/user/month (limited features — the decoy)
• Pro: NT$299/user/month (full features — the target)
• Enterprise: NT$499/user/month (with SSO, audit logs — anchor)

**Why**: Pro at NT$299 looks like great value vs Enterprise at NT$499, and much better than Basic at NT$199 for only NT$100 more.

Incorrect Application

**What went wrong:**

• Set price at cost + 20% (NT$180/user) without checking competitor reference or customer ceiling → Left NT$120+