---
title: Pricing Fundamentals — Pricing & Positioning Module 1 — RGM Training
url: https://realgrowthmatters.com/training/pricing-positioning/pricing-strategy-and-packaging/
updated: 2026-06-10
source_html: https://realgrowthmatters.com/training/pricing-positioning/pricing-strategy-and-packaging/
---

RGM° · Training

# Pricing Fundamentals

Pricing has more leverage on operating profit than any other variable. This module is the operating map: the four strategies, when each works, and the annual review cadence that makes pricing a managed discipline rather than an inherited default.

### What you will learn

1. Why pricing is the most under-managed lever in marketing
2. The four pricing strategies: cost-plus, competitive, value-based, dynamic
3. Price as positioning: the premium / mid / discount tier signal
4. Value-based pricing in practice
5. Price discrimination and segmentation
6. Price testing methodology
7. The psychology of pricing
8. Pricing under inflation and macro pressure
9. Pricing tech stack
10. Pricing organization: who owns it
11. The annual pricing review

## 1. Pricing as a lever

Pricing has more leverage on operating profit than any other variable, yet most companies under-invest. McKinsey research finds that a 1% price improvement produces ~8% operating profit improvement in average enterprise; equivalent volume or cost gains require 3 - 5x more effort.

## 2. Four pricing strategies

| Strategy | Basis | When to use |
| --- | --- | --- |
| Cost-plus | Cost + margin target | Commodity, manufacturing |
| Competitive | Competitor price + delta | Mature markets, comparable products |
| Value-based | Customer willingness-to-pay | Differentiated products, B2B |
| Dynamic | Real-time demand | Travel, hospitality, e-commerce |

## 3. Price as positioning

Price itself signals positioning. Premium pricing supports premium positioning; discount pricing supports value positioning. Mismatch — premium positioning at discount price — produces consumer confusion and brand damage. Many brand-strategy failures originate in pricing decisions.

## 4. Value-based pricing

Value-based pricing requires:

1. Quantify the customer's willingness to pay.
2. Identify the value drivers (cost savings, revenue lift, risk reduction, time saved).
3. Build a value-share principle (you capture 20 - 40% of value created).
4. Verify with conjoint analysis or price-sensitivity surveys.
5. Test in market.

## 5. Price discrimination and segmentation

Three-degree price discrimination:

- First-degree: individual willingness-to-pay extraction (rare).
- Second-degree: tier-based (good/better/best).
- Third-degree: segment-based (student, military, corporate).

## 6. Price testing

Approaches:

- A/B testing in market.
- Van Westendorp Price Sensitivity Meter (survey-based).
- Conjoint analysis (preferred for complex offerings).
- Discrete choice modeling.
- Matched-market geographic tests.

## 7. Pricing psychology

- Charm pricing ($9.99 vs $10): persistent effect in retail.
- Anchoring: high-tier option lifts willingness-to-pay for mid-tier.
- Decoy effect (Ariely's magazine subscription example).
- Bundling reduces price salience.
- Reference price formation.

## 8. Pricing under inflation

The 2021 - 2024 inflation cycle exposed weak pricing organizations. Operating moves:

- Index-based pricing for B2B contracts.
- "Shrinkflation" risks (consumer detection).
- Pass-through speed by category.
- Customer communication on price changes.

## 9. Pricing tech stack

- Pricing software (Pricefx, Vendavo, PROS, Zilliant, Vistaar).
- Subscription pricing (Stripe, Recurly, Chargebee, Stigg).
- Promo optimization (Eversight, Revionics, dunnhumby).
- CPQ for B2B (Salesforce CPQ, Conga, Apttus).

## 10. Pricing organization

Who owns pricing varies: finance, product, marketing, dedicated pricing function. The strongest pricing organizations have a dedicated pricing team with finance and marketing connectivity, reporting to CFO or COO.

## 11. Annual pricing review

1. Competitive landscape and value position.
2. Price-elasticity refresh.
3. Tier mix analysis.
4. Discount-and-promotion economics.
5. Annual price-action plan.
6. Customer-communication plan for changes.

**How to use this module:** The four-strategy table (Section 2), the value-based pricing steps (Section 4), and the annual review framework (Section 11) are the planning artifacts.

### Sources & further reading

- Books: Hermann Simon, *Confessions of the Pricing Man*; Madhavan Ramanujam, *Monetizing Innovation*; Tim Smith, *Pricing Done Right*; Patrick Campbell, ProfitWell library
- [McKinsey on pricing](https://www.mckinsey.com/business-functions/growth-marketing-and-sales/our-insights/pricing-the-next-frontier-of-value-creation-in-business)
- [Bain pricing](https://www.bain.com/insights/topics/pricing/)
- [Simon-Kucher insights](https://www.simon-kucher.com/insights)
- [ProfitWell research](https://www.profitwell.com/recur)
- [Price Intelligently blog](https://www.priceintelligently.com/blog)
- [Pricing News](https://www.pricingnews.com/)
- [Pricing Matters](https://www.pricingmatters.com/)
- [OpenView pricing](https://www.openviewpartners.com/blog/topic/pricing/)
- [Patrick McKenzie on pricing](https://kalzumeus.com/2020/06/03/enterprise-pricing/)
- [Stripe Atlas SaaS pricing](https://stripe.com/atlas/guides/business-of-saas)
- [HBR Pricing](https://www.harvardbusinessreview.com/topic/pricing-strategy)

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Part of the [Pricing & Positioning](/training/pricing-positioning/) series · RGM Training