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Pricing Strategy

A pricing strategy is the method a business uses to set prices for its products or services. It considers costs, competition, perceived value, and market positioning.

Pricing Strategy Definition

A pricing strategy is the approach your business takes to determine what to charge for products or services. The right strategy balances profitability, competitiveness, and customer perception.

Common Pricing Strategies

  • Cost-plus — add a markup percentage to your total cost (simple, common for products)
  • Value-based — price based on the perceived value to the customer, not your cost
  • Competitive — match or undercut competitor pricing
  • Penetration — start low to gain market share, raise prices later
  • Premium — price high to signal quality and exclusivity
  • Tiered — offer multiple price points with different feature sets

    • How Pricing Affects Your Books

    Your pricing strategy directly determines your gross margin. If you're cost-plus at 30% markup, your gross margin is ~23%. Your P&L tells you whether your pricing supports your overhead.

    How to Evaluate Pricing in QuickBooks

  • Run a P&L by Product/Service to see margins per offering
  • Check Gross Margin — if it's declining, your pricing may not be keeping up with cost increases
  • Review Sales by Customer — are your biggest customers also your most profitable?

    • FAQ

    Q: How often should I review my pricing?

    A: At minimum, annually. Also review after significant cost increases, competitive changes, or when gross margin drops below target.

    Related Terms

  • Gross Margin
  • Revenue
  • Cost Of Goods Sold
  • Break Even Point

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    Related Terms

    Book Value

    Book value is the value of an asset on your balance sheet after subtracting accumulated depreciation or amortization. It represents what the asset is "worth" according to your accounting records — not necessarily what you could sell it for on the open market. Book value is also used to describe the

    Journal Entry

    A journal entry is a record of a financial transaction in the accounting system, showing the accounts debited and credited along with the amounts. Every journal entry must balance—total debits must equal total credits. Journal entries are the building blocks of double-entry bookkeeping and how trans

    Payroll Liability

    Payroll liability is the total amount of payroll-related obligations your business owes but hasn't paid yet. This includes withheld employee income taxes, the employee and employer shares of FICA (Social Security and Medicare), state and federal unemployment taxes, and any other deductions like heal

    Non-Operating Income

    Non-operating income is revenue generated from activities outside a business's main operations. This includes interest earned on bank accounts, investment gains, rental income from unused property, insurance settlements, and gains from asset sales. Non-operating income appears separately on the inco

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