Pricing Strategy Calculator

A pricing strategy is the rule you follow to set the price of a product. Different strategies optimise for different things — margin, market share, perceived value, or competitive position. This tool walks you through the six most-used strategies and tells you which one keeps your unit economics healthy.

How each strategy works

Six strategies, six formulas:

Cost-plus: Price = Cost × (1 + Markup%) | Value-based: Price = Perceived value × Capture% | Competitive: Price = Competitor × (1 ± Positioning%) | Penetration: Cost + thin margin (~10%) | Premium: Cost × 3 (200% markup) | Psychological: Floor(Cost × 1.5) − 0.01

Worked example

A SaaS product with a unit cost of 100 SAR, priced four ways:

1. Cost-plus 30% markup: 100 × 1.3 = 130 SAR (23% margin)
2. Penetration (10%): 110 SAR — grabs share but only 9% margin
3. Premium (200% markup): 300 SAR — needs a brand story to support it
4. Psychological: floor(150) − 0.01 = 149.99 SAR (33% margin)
5. Add 15% VAT to any of these to get the customer-facing sticker

Practical tips

• Healthy margin starts at 25%; below that you can't absorb refunds, returns, or fee changes.
• Premium pricing only works if your customer believes the value matches — test before committing.
• Penetration pricing should be a phase, not a strategy — exit it before competitors copy you.
• Psychological (.99) endings lift retail conversion roughly 5–10% in published studies — use it for impulse-buy SKUs.
• For deep margin/markup analysis (find-margin, find-price, find-cost), use the Profit Margin Calculator.