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Sales & Pricing

Pricing Strategy Calculator

Price your product with 6 pricing strategies, VAT and margin included

Pricing Strategy Calculator
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Pricing strategy

What it costs you to produce or acquire one unit.

Profit as a percentage of cost.

Base price

130SAR

VAT (15%)

19.5SAR

Final price with VAT

149.5SAR

Profit per unit

30SAR

Profit margin

23.08%

Markup: 30%

Margin is below 25% — fragile against refunds and fee changes.

For deeper margin/markup analysis, use the Profit Margin Calculator.

Open Profit Margin Calculator

How does it work?

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.

Frequently Asked Questions

What's the difference between margin and markup?

Markup is profit divided by cost; margin is profit divided by price. A 50% markup is only a 33% margin. Most retailers think in markup; finance teams report in margin.

Should I include VAT in the displayed price?

In Saudi Arabia, B2C prices must be VAT-inclusive on the sticker. B2B invoices usually show the pre-VAT base, then add 15% on a separate line.

Why is cost-plus considered a 'lazy' strategy?

It ignores what the customer is willing to pay. A product that costs you 100 to make but solves a 10,000 SAR problem can be priced anywhere in between — cost-plus would always undersell it.

When should I use penetration pricing?

When you're entering a market with established competitors and need to win attention. Plan an exit ramp — once you have customer relationships, raise prices toward your sustainable margin.

What does the 'recommendation' label mean?

Healthy = 25–60% margin. Low = under 25% (fragile). Premium = above 60% (needs brand support to defend). Negative = base price is below cost (every sale loses money).

Can I use this for services as well as products?

Yes — cost-plus and value-based are the most relevant for services. Use your loaded hourly rate as 'cost' and the project hours as the multiplier.

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