Pick Your Price Model

Your challenge:
Limited or inaccurate market and customer data. Without accurate insights into consumer behavior, demand patterns, and competitive trends, it’s nearly impossible to effectively leverage psychology or perceived value.
Overreliance on cost or competitor-based pricing. Focusing too narrowly on internal costs or competitor actions prevents organizations from optimizing prices to reflect the unique value they provide.

Our Advice

Critical Insight

Organizations have primarily focused on cost-cutting, acquisition, and improving operation processes and product innovation to achieve business profitability. For a long time, the need for dedicated resources and skill sets to build the right pricing model and strategy has been overlooked.

Impact and Result

Adjust prices based on demand, competition, or other external factors.
Use pricing strategies that leverage customer psychology to encourage purchasing decisions.
Set prices based on the perceived value your product or service delivers to customers rather than on cost or competitor prices.

Pick Your Price Model Research & Tools

1. Pick Your Price Model Deck – A deck to help you determine the right price for offerings based on the customer and market.

In today’s volatile economy, a successful pricing strategy goes beyond setting a profitable rate; it clarifies how your products or service’s value and total cost of ownership (TCO) justify its price. By illuminating the full costs – purchase, implementation, and maintenance – against the promised outcomes, you help buyers see why paying more upfront can lead to greater long-term returns. Selecting the right pricing model (usage-based, subscription-based, tiered, or hybrid) and continuously refining it with data analytics and market insights ensures profitability and customer satisfaction. This dynamic approach keeps your offer competitive despite economic conditions and customer expectations shifting.

2. Pick Your Price Model Workbook – A structured tool to help you prioritize which pricing models build the correct roadmap to ensure success.

This workbook is designed to help product managers select their price model and strategy.

It enables product managers to align the organization on a common educated price approach to managing their pricing strategy and processes.

3. Pick Your Price Model Executive Presentation Template – A best-of-breed template to help you build a clear, concise, and compelling price model strategy document for stakeholders.

This presentation template uses sample data from "Acme Corp" to demonstrate the price model project to executives to gain buy-in. Use this template to document your final pricing model decisions.

Pick Your Price Model

Determine the right pricing strategy. Learn when and how to use each pricing model.

Analyst perspective

In today’s volatile economy, establishing an optimized pricing strategy isn’t just about setting a profitable rate, it’s about effectively conveying the value your product or service brings relative to its total cost of ownership (TCO). This includes costs to purchase, implement, and maintain the solution, all of which must be balanced against the business outcomes you promise. By making this connection transparent, you help potential buyers understand why the price is justified and how, in many cases, paying a little more upfront can yield greater returns in the long run. This clear demonstration of value can mean the difference between winning or losing a deal in an environment where budgets are under heightened scrutiny.

Equally important is selecting the right pricing model – whether that means usage-based, subscription-based, tiered, or a hybrid approach – that aligns with your market positioning and revenue goals. The framework works as a roadmap, guiding you through factors like customer segments, the competitive landscape, and internal cost structures to determine which model is the best fit.

By combining robust data analytics, user feedback, and a firm grasp of market conditions, you can repeatedly refine your approach to achieve maximum profitability while meeting (or surpassing) customer expectations. This dynamic, data-driven process ultimately enhances your product’s long-term success, ensuring it remains competitive even as economic conditions and customer needs evolve.

Joanne Morin Correia.

Joanne Morin Correia
Principle Director, Marketing
Info-Tech Research Group

Executive summary

Challenge	Obstacles	Info-Tech Approach
Limited or inaccurate market and customer data. Without accurate insights into consumer behavior, demand patterns, and competitive trends, it’s nearly impossible to leverage psychology or perceived value effectively. Overreliance on cost or competitor-based pricing. Focusing too narrowly on internal costs or competitor actions prevents organizations from optimizing prices to reflect the unique value they provide.	Internal resistance and cross-department misalignment. Fear of revenue disruption or brand damage can hinder consensus on adopting new, more dynamic pricing models Limited pricing expertise and tools. The lack of specialized knowledge and resources makes it challenging to analyze market signals or apply psychological pricing tactics effectively.	Adjust prices based on demand, competition, or other external factors. Use pricing strategies that leverage customer psychology to encourage purchasing decisions. Set prices based on the perceived value your product or service delivers to customers rather than on cost or competitor prices.

Challenge

Obstacles

Info-Tech Approach

Limited or inaccurate market and customer data. Without accurate insights into consumer behavior, demand patterns, and competitive trends, it’s nearly impossible to leverage psychology or perceived value effectively.

Overreliance on cost or competitor-based pricing. Focusing too narrowly on internal costs or competitor actions prevents organizations from optimizing prices to reflect the unique value they provide.

Internal resistance and cross-department misalignment. Fear of revenue disruption or brand damage can hinder consensus on adopting new, more dynamic pricing models

Limited pricing expertise and tools. The lack of specialized knowledge and resources makes it challenging to analyze market signals or apply psychological pricing tactics effectively.

Adjust prices based on demand, competition, or other external factors.

Use pricing strategies that leverage customer psychology to encourage purchasing decisions.

Set prices based on the perceived value your product or service delivers to customers rather than on cost or competitor prices.

Info-Tech Insight

Organizations have mostly focused on cost-cutting, acquisition, and improving operation processes and product innovation to achieve business profitability. The need for dedicated resources and skill sets to build the right pricing model and strategy has been overlooked long enough.

Pricing is (arguably) the most important part of a marketing strategy

A marketing strategy is vital for any business.

Product
A good or service that addresses customer needs or solves problems.

Promotion
Differentiate your product from competitors.

Place
Where customers will find the product.

Price
Based on the value of the product.

“Pricing is by far the biggest tool for earning improvements.”
– McKinsey, 2019

“Pricing is the only revenue-generating element in the marketing mix (the other three are cost centers – that is, they add cost to a company’s cost).”
– MaRS Discovery District

Charge as much as you can get away with?

“Customer discovery interviews help reduce the chance of failure by testing your hypotheses. Quality customer interviews go beyond answering product development and pricing questions.”
– Growth Ramp, 2022

An effective pricing strategy is…

An integral part of any product plan and business strategy.
Essential to improving and maintaining high levels of margins and customer satisfaction.
Focused on delivering the correct product price for your customer’s business value.
Understanding the customer price-value for your software segment.
Monitoring your product pricing with real-time data to ensure support for competitive strategy.

Price strategy is not…

Increasing or decreasing price on a gut feeling.
Changing price for short-term gain.
Being wary of asking customers pricing-related questions.
Haphazardly focusing entirely on profit.
Just covering product costs.
Only researching direct competitors.
Focusing on yourself or company satisfaction but on your target customers.
Picking the first strategy you see.

Info-Tech Insight
An optimized pricing strategy establishes the “best” price for a product or service that maximizes profits and shareholder value while considering customer business value versus the cost to purchase and implement – the total cost of ownership (TCO).

Determining the correct pricing strategy has never been more challenging

Global markets moving to a more hostile planning environment, aggressive competition, and increasingly savvy customers make finding the right pricing strategy difficult.

Supplier costs and inflation will rise again, eroding product margins and impacting customers’ budgets.
There is pressure from management to make a decision based on gut feeling because of time, lack of skills, and process limitations.
You must navigate competing pricing-related priorities among Product, Sales, and Finance.
Product price increases can fail because discovery lacks understanding of costs, price/value equation, and competitive price points.
Slowing customer demand due to poorly priced offerings may not be fully measured for many months following the price decision.

Companies need a consistent pricing strategy

An effective pricing strategy not only helps you to increase profitability but also:

Increase repeat purchases/loyalty
Improve brand perceptions
Portray better product value
Build trust
Increase confidence in products
Increase satisfaction

Pricing strategy
A pricing strategy is a method that helps you to place a dollar number on any product or service based on:

The cost to create the product or service and add a mark up with an intended profit.
Perceived value of the specific product or service by the customer.

Benefits of an optimized pricing strategy

Optimize profitability, business growth, and customer satisfaction
Align to strategic priorities, market share growth, and expanded margin
Determine the right price for offerings based on the customer and market
React to supply chain issues or changes in consumer demand
Stay competitive among peers in the market

Companies need help to price their offerings.

Challenges
Understanding their market	Lack of competitive intelligence, including pricing
Understanding their market	Lack of ability to assess the value of offerings
Understanding their clients	Lack of client/market insights to support decision-making around pricing
Understanding their clients	Lack of understanding of drivers that impact pricing strategy
Understanding pricing optimization	Lack of pricing experience in evolving market
Understanding pricing optimization	Lack of knowledge of how a pricing strategy works for their offerings

“Many companies focus on acquisition to grow their business, but studies have shown that small variations in pricing can raise or lower revenue by 20-50%. Despite that, even among Fortune 500 companies, fewer than 5% have functions dedicated to setting the best price possible.”
Source: ProfitWell, March 2021

Common Mistakes
Overlooking profit and pricing	Focus on revenue, largely ignoring factors that impact the cost
Overlooking profit and pricing	Hold prices at the same level for too long
Using a suboptimal pricing model	Attempt to achieve the same profit margin across different offerings
Using a suboptimal pricing model	Fail to segment customers for appropriate value propositions

“Pricing is a balance of art, math, and psychology, and generally, people are brought up in one discipline or another and can't balance the inputs. So, very few people have experience or skills broad enough to consider all of them when pricing a product or service.”
– Eric McCullough, LinkedIn 2019

Don’t be a laggard, be a leader!

Component	Laggard	Standardized	Leader
Process	Ad hoc processes, no clear policies	Defined but poorly integrated processes	Fully integrated, cross-functional processes with feedback loops for adjustments
Organization	No clear owner of pricing, shared across teams	Global and regional pricing review committees	Centralized pricing organization with a deal desk overseeing approvals
Technology	Excel is the primary tool	Disparate systems, mostly point solutions	Integrated systems using master data for transaction pricing
Data & Analytics	Ad hoc capture of high-level data, limited analytics	Data captured across price waterfall, basic analytics	Data captured across price waterfall, used to model future pricing and refine strategies

The most successful players in transactional pricing management distinguish themselves using advanced analytics and cross-functional collaboration to learn from past deals and continually refine future offers.

Modern pricing engines use entitlement data and loyalty metrics to deliver personalized incentives that simultaneously boost customer satisfaction and profitability.

A proper strategy needs to consider many factors to be effective

External factors
Competition	Determine a price range of similar offerings based on the competitive landscape
Market	Create an understanding of the specific needs of customers and position your offerings
Demand	Influence the pricing of offerings depending on demand in the market and global disruption in the supply chain
Perceived value	Determine a price range based on customer willingness to spend based on the value of offerings
Price anchoring	Use initial price to determine the perceived value and influence demand for future price change
Internal factors
Uniqueness	The distinct features, capabilities, or brand attributes differentiate your offering and allow for premium pricing.
Margin	The portion of a company’s sales revenue that it retains as a profit after costs.
Cost to serve	The full cost of delivering, supporting, and maintaining the offering (e.g. operations, support, training, warranty).
Revenue goal	The total sales target you need to hit, which is used to back‑solve the price and volume combination that achieves your financial objectives.

Consider more effective pricing decisions

Pricing teams can improve profitability by:

Optimizing profit with four critical elements: correctly pricing your product, giving complete and accurate quotations, choosing the terms of the sale, and selecting the payment method.
Implementing tailored price changes (versus across-the-board price actions) to help account for inflation exposure, customer willingness to pay, and product attribute changes.
Accelerating ongoing pricing decision-making with a dedicated cross-functional team ready to act quickly.
Resetting discounting and promotion and revisiting service-level agreements.

Pricing leaders should regularly assess:

Has it been over a year since prices were updated?
Have customers told you to raise your prices? Do you have the right mix of customers in each pricing plan?
Do 40% of your customers say they would be disappointed if your product disappeared?

– Adapted from Growth Ramp, 2021

Info-Tech's framework for determining the correct pricing strategy.

Arriving at a new product pricing model

As a collaborative team across Product Management, Marketing, and Finance, we see leaders taking a simple yet well-researched approach when setting product pricing.

When establishing a new pricing model, it helps to iterate among three key views:

Cost-Plus (anchoring price in production, supplier costs, and desired profit margin)
Buyer Price vs. Value (understanding how customers perceive and prioritize your offering)
Competitive Landscape (benchmarking against key rivals)

This iterative process clarifies where your price point should fall and how to package your product or service.

The image contains a screenshot of a diagram that demonstrates three different views when it comes to new target pricing and packaging.

Who should care about pricing?	How will they benefit from this research?
Product managers and marketers who: Support the mandate for optimizing pricing and revenue generation.  Need a more scientific way to plan and implement new pricing processes and methods to optimize revenue and profits. Want to better apply customer and competitive insights to product pricing. Are evaluating current pricing and cost control to support a refreshed pricing strategy.	Refine the ability to effectively target pricing to specific market demands and customer segments. Recognize and plan for new revenue opportunities or cost increases. Improve pricing skills for professional development and business outcomes. Strengthen product team’s reputation for reliable and repeatable price-management capabilities among senior leadership. Allow for faster, more accurate intake of customer and competitive data. Create new product price, packaging, or market opportunities.
Finance, sales, and marketing professionals who are pricing stakeholders in: Finding alternatives to current pricing and packaging approaches. Looking for ways to optimize price within the shifting market momentum.	Reduce financial costs and mistakes associated with manual efforts and uneducated guessing. Enhance the product development and sales processes with real competitive data and customer expectations. Price software products that better achieve financial goals optimizing revenue, margins, or market share.

Who should care about pricing?

How will they benefit from this research?

Product managers and marketers who:

Support the mandate for optimizing pricing and revenue generation. 
Need a more scientific way to plan and implement new pricing processes and methods to optimize revenue and profits.
Want to better apply customer and competitive insights to product pricing.
Are evaluating current pricing and cost control to support a refreshed pricing strategy.

Refine the ability to effectively target pricing to specific market demands and customer segments.

Recognize and plan for new revenue opportunities or cost increases.

Improve pricing skills for professional development and business outcomes.

Strengthen product team’s reputation for reliable and repeatable price-management capabilities among senior leadership.

Allow for faster, more accurate intake of customer and competitive data.

Create new product price, packaging, or market opportunities.

Finance, sales, and marketing professionals who are pricing stakeholders in:

Finding alternatives to current pricing and packaging approaches.
Looking for ways to optimize price within the shifting market momentum.

Reduce financial costs and mistakes associated with manual efforts and uneducated guessing.

Enhance the product development and sales processes with real competitive data and customer expectations.

Price software products that better achieve financial goals optimizing revenue, margins, or market share.

Case Study

Product Pricing & Packaging

Category: MFG Execution

HQ Location: Cincinnati, Ohio

Revenues: >10m

Industries: Manufacturing

Problem
CIMx, a manufacturing execution software company, was launching its SMB cloud product line. It needed to understand and test its research for new pricing, packaging, and services before finalizing its decisions in less than 90 days.

Solution
The program’s core objective was to determine whether the pricing the team determined was right for the market, how the product should be delivered in a cloud-only environment, and what services should be offered in a self-service delivery model against their competition.
For this initiative, the market analysts provided research on customer reviews, packaging for cloud deployments, and competitors. Together with CIMx, we interviewed manufacturing analyst Shreyas multiple times:

What optimal features and capabilities valued by customers should be sold together?
What can they charge for their products?
How should they price and contract in the MFG SMB market?
How do these decisions compare to their current and new competitors?

Value
Based on our recommendations, CIMx has launched its cloud SMB product with a focused feature set and launch plan.
CIMx was able to shorten the time to demo from 90 days to 14, dramatically shortening the time to value for these SMB prospects based on these recommendations.

The image contains two screenshots of the Manufacturing Execution.

The image contains a screenshot of the medal of Software Reviews top rated.

Case Study

IT partners delivered outcomes and were compensated based on value-based pricing.

Source: Priced to Win: Build an Optimized Pricing Strategy

INDUSTRY: Master Franchise of a Leading Global Fast-Food Chain

SOURCE: Sajid Pathan, in contributor interview
Business Analytics Consulting Group (BACG)

Challenge	Solution	Results
The CFO wanted to increase the business revenue and launched a burger as a new product at a discounted rate between noon to 3pm among 40 stores at different locations. Twenty-one of the stores were way below the targets they had set for that promotion. The CFO wanted to know why half of the stores were not meeting promotional targets and approached BACG, a consulting company, to seek solutions.	After 15 days of promotion, BACG leveraged data analytics and a report was generated to dive deep into every store’s new burger sale, numbers of staff, and location and found the stores in residential areas were the ones not meeting the target because most of the people go to work during promotion hours. In contrast, the stores in commercial areas met the target because people working nearby were buying the promotional burgers during lunchtime. Also, these stores were busy, and staff struggled to serve customers due to the high demand for the burger.	With the help of insights derived using data analytics, the CFO was able to strategize and developed a customized plan to roll out the new burger promotion at all the stores with necessary changes. Promotion timing was changed to evening for the low-performing stores to target people living in residential areas. The stores meeting promotional goals were allocated more staff to meet demand during promotion hours. As a result, all the stores achieved targeted goals and contributed to business revenue.
The client explained the business problem to BACG, who understood the client’s challenge and obtained the client’s consent to pay an engagement fee based on the financial results of the pricing optimization.	The consulting company used data analytics to discover the client’s problem and strategize a plan to overcome the challenge.	The consulting company delivered the financial results and was able to charge the client based on value-based pricing.

Info-Tech’s methodology for Pick Your Price Model

	Align Team, Research, Select Pricing Model, and Gain Approvals
Steps	Establish the team and responsibilities Educate/align team on pricing strategy Document costs relating to target product(s) Clarify product target margins Establish customer price to value Identify competitors’ pricing Understand different price models Establish a new price model strategy and gain buy-in
Outcomes	Well-organized project Clarified product pricing strategy Customer value vs. price equation Competitive price points New price model analysis Approvals

Insight summary

Modernize your price planning
Product leaders will price products based on a deep understanding of the buyer price/value equation and alignment with financial and competitive pricing strategies and make ongoing adjustments based on an ability to monitor buyer, competitor, and product cost changes.

Cost-based pricing dominates
Different models of pricing (hourly rate, project based, daily rate, value based) are commonly used across your industry. However, the most common strategy employed is cost based because this strategy provides straightforward calculation and lower effort to price products and services.

Broaden your input horizon to optimize pricing strategy
Pricing is not simple; it needs input and well-thought-out research on external and internal factors that influence the offering’s pricing. The profit margin depends on how differentiated your product is from competitors, its value to the customer, and the customer’s willingness to pay.

Improve value delivery and profit margin
Do not price every product and service based on value because customers assign different values to similar products. It’s possible to add more value to other offerings with bundling.

Develop the skill of pricing products
Increase product revenues and margins by enhancing modern processes and data monetization. Shift from intuitive to information-based pricing decisions.

Look at other options for revenue
Adjust product design, features, packaging, and contract terms while maintaining the functionality customers find valuable to their business.

Blueprint deliverables

*The Pick Your Price Model* blueprint** emphasizes the importance of choosing the right pricing strategy to align with business objectives, market conditions, and customer expectations. It provides a decision tree to guide the selection process, ensuring you make informed decisions that maximize product or service success.
The workbook is designed to help product managers test their pricing models. This enables them to align the organization on a common pricing approach to manage their pricing strategy and processes.
The decision tree for determining the pricing model is a visual tool to guide the selection process of the most suitable pricing model. It helps in making informed decisions by considering various factors and outcomes.

Key deliverable

Executive presentation on the chosen pricing model with in-depth analysis of the selected pricing strategy for your product/service.

The rationale behind the choice is based on market research and business objectives.

The image contains a screenshot of the executive presentation.

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit	Guided Implementation	Workshop	Executive & Technical Counseling	Consulting
“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.”	“Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.”	“We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.”	“Our team and processes are maturing; however, to expedite the journey we’ll need a seasoned practitioner to coach and validate approaches, deliverables, and opportunities.”	“Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.”

Diagnostics and consistent frameworks are used throughout all five options.

Determine the right pricing strategy. Learn when and how to use each pricing model.

About Info-Tech

Info-Tech Research Group is the world’s fastest-growing information technology research and advisory company, proudly serving over 30,000 IT professionals.

We produce unbiased and highly relevant research to help CIOs and IT leaders make strategic, timely, and well-informed decisions. We partner closely with IT teams to provide everything they need, from actionable tools to analyst guidance, ensuring they deliver measurable results for their organizations.

What Is a Blueprint?

A blueprint is designed to be a roadmap, containing a methodology and the tools and templates you need to solve your IT problems.

Each blueprint can be accompanied by a Guided Implementation that provides you access to our world-class analysts to help you get through the project.

Table of Contents

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Guided Implementation 1: Alignment

Call 1: Share the pricing team vision and outline activities for the pricing strategy process.
Call 2: Outline products that require a new pricing approach and steps with Finance.
Call 3: Discuss the customer interview process.
Call 4: Outline competitive analysis.

Guided Implementation 2: Research & Reprice

Call 1: Review customer and competitive results for initial new pricing business case with Finance for alignment.
Call 2: Review the initial business case against financial plans across marketing, sales, and product development.