Pricing
The strategy and process for setting the price of a product or service. Main approaches: cost-plus pricing, value-based pricing, competitive pricing and tariff segmentation (freemium, tiered packages, usage-based billing).
In practice
Pricing is typically the most underused profitability lever. A 5% price increase on a product with 40% gross margin improves operating profit by 12.5% with no additional cost. Companies that set prices by adding a fixed margin to costs systematically leave money on the table above that floor. Willingness-to-pay testing almost invariably reveals an optimal price higher than the one currently charged.