What startups need to know about pricing strategy

Pricing strategy can make or break a startup's growth trajectory. When done correctly, it complements your revenue model and accelerates scaling. When done wrong, you'll struggle to sustain the business. This guide covers the frameworks for getting pricing right from the start.

In this series, TechNexus provides insights on growth strategies for startups. Follow along with the entire series here . Crafting a pricing strategy takes time and discipline to implement effectively. When done correctly, your pricing strategy complements your revenue model and overall growth strategy. When done incorrectly, you will struggle to sell and your business could fail. Fortunately, pricing strategy is something anyone can understand and implement, and I’m here to help you get started. Revenue model vs. pricing strategy First, it's important to understand the difference between a revenue model and a pricing strategy, which are often conflated. Your revenue model is a key component of your overall business model—it defines the core method by which your business generates income. This model should align with the nature of your business and target audience. For instance, if you are a B2B company, your revenue model might involve selling subscriptions, licenses, or service contracts to other businesses. The revenue model provides the structure for how your company makes money and ideally remains consistent throughout the lifecycle of your business, offering stability and a clear path to profitability. On the other hand, your pricing strategy determines the specific tactics you use to sell your product or service within the framework of your revenue model. It builds upon the revenue model and should evolve as your business grows. Think of it as a one-to-many relationship: For every revenue model, there are multiple possible pricing strategies that can be employed to meet your business objectives and resonate with your target market. For example, let’s say you own an inventory management software company that targets mid-market logistics companies. Your revenue model might be charging your customers an annual subscription for a software license. The amount you charge for this license and the structure in which it’s delivered is determined by your pricing strate