Pricing cases ask you to determine the optimal price for a product or service. They combine quantitative analysis with strategic thinking.
Three Core Pricing Approaches
Cost-Plus Pricing
Start with production costs and add a target margin. Simple but ignores market dynamics.
Value-Based Pricing
Price based on the value delivered to customers. Requires understanding willingness to pay.
Competitive Pricing
Benchmark against competitors and position accordingly. Best for commodity markets.
A Step-by-Step Approach
- Understand the objective — Maximize revenue, market share, or profit?
- Analyze costs — Fixed vs. variable, break-even point
- Assess demand — Price elasticity, customer segments
- Evaluate competition — Pricing benchmarks, positioning
- Recommend and quantify — Expected impact on revenue and volume
Example: SaaS Pricing
A B2B SaaS company is launching a new product. How would you price it?
- Calculate cost to serve per customer
- Research competitor pricing tiers
- Survey customer willingness to pay
- Design tiered pricing to capture different segments
- Test with a pilot group before full launch