When most business leaders set prices, they focus on models such as cost-plus, value-based pricing, or competitive pricing. They may do this because their research is centered on their competitors or their company’s financial needs and historical results, or they may not know of other pricing strategies that could work better. The wrong strategy will hold your growth back; the right one will skyrocket your revenue growth.

It all starts with research. If you have incomplete data about your competitors, it may lead to underpricing. And, as good as your financial records can be, without market data and validation, the numbers cannot tell you if you are under- or overpriced relative to the competition. Underpricing can be a bigger issue than overpricing. It limits your financial growth and can also damage your brand and reputation. The best pricing strategies begin with market research.

While market research is necessary to create a solid pricing strategy, the research needs to be valid and verifiable. I sometimes hear that a company will “mystery shop” their competition. Mystery shopping is great for products on shelves that have unit prices, but not for services. You can rarely get enough information to accurately compare pricing, and the information you do get is difficult – if not impossible – to verify.

When Foresight develops a pricing strategy, we are designing a strategy for revenue growth, and include details such as when discounting can be used, how your offerings are productized, and for which segments of the market each pricing model applies. There are many benefits of developing a market-based pricing strategy. Here are just three of them:

Margin optimization that funds growth and innovation.

A well-designed pricing strategy ensures you’re capturing appropriate value for what you deliver, rather than leaving money on the table or racing to the bottom with discounts. When you price based on value to the customer rather than just cost-plus or competitor matching, you create healthier margins that can be reinvested in product development, customer experience, marketing, and talent. While competitors with weak pricing struggle to fund improvements, you’re building a better product and pulling further ahead.

Market positioning and customer segmentation clarity. Your pricing signals who you’re for and what you stand for in the market. Strategic pricing allows you to serve different customer segments profitably—perhaps offering a streamlined version for price-sensitive buyers while reserving premium tiers for those who need advanced features. Competitors without this clarity often end up with a muddled position, trying to be everything to everyone and winning with no one. Your pricing architecture becomes a strategic tool that helps you own specific segments rather than competing everywhere.

Predictable revenue and reduced customer churn. A pricing strategy that aligns with how customers derive value—whether that’s usage-based, tiered subscriptions, or outcome-based—creates natural stickiness. When customers feel they’re paying fairly for what they get, they stay longer. Strategic pricing also helps you avoid the destructive cycle of deep discounting to win deals, which attracts price-sensitive customers who’ll leave the moment a cheaper option appears. Meanwhile, competitors giving away discounts to hit quarterly numbers are building an unstable customer base and training their market to expect unsustainable prices.

The companies that treat pricing as strategy rather than just a number on a proposal gain compounding advantages: better unit economics, clearer market position, and more stable growth trajectories. Are you leaving money on the table? Set up a complimentary pricing call to find out!