A Guide to Setting Price Points that Bring Value and Boost Profits

Setting Price Points

Each price depends on the number of price points corresponding to various factors linked to a product or a service. At this point, if you know how to find and set a great price point, it means you will have pricing for a product serving your best interest.

With a price point phenomenon in general, it is important to consider the function concept’s elasticity. In other words, if you want to anticipate the number of items sold at different prices and various price points, you won’t omit the elasticity of function. When done correctly, the price point helps boost profit, maximize revenue, and increase the overall sales volume. Keeping this in mind, let’s explore the nature of the price point concept, discover the meaning of price thresholds, and look at several distinct phases in which price point functions.

The Nature of the Price Point Concept

In short, a price point allows companies to tap into a particular pricing strategy. The very nature of the phenomenon is all about finding the weak points in the chosen pricing approach to help a business deal with them effectively and choose an alternative pricing method. When defining the right price point, keeping the demand degree relatively high for a particular product or service is important.

What Is the Role of Price Thresholds in Price Points?

A price threshold is an approach to tying the distinct connection between the given price and the consumer’s willingness to pay a certain price for the product. Price thresholds are vital in price points because they show what attracts consumers and what prices are too high to be effective. When designed correctly, the price threshold creates the condition when consumers pay the maximum possible price.

Price point thresholds matter because they can:

  1. Increase the revenue
  2. Reinforce customer loyalty

As a result, price thresholds are at the core of the price point phenomenon. To tap into what the concept offers, you must know how to use price thresholds. It means you need to know how to link consumer behaviors to prices.

Several Key Methods Toward Dealing with a Price Point

At this point, we know about the nature of price points and the role of price thresholds. It is time to proceed to the key methods for making a price point work. You have these distinct approaches to follow:

  1. Testing
  2. Advanced Solutions
  3. Analysis
  4. Skimming Model with Entry Points
  5. Building Up the Right Price Point
  6. Monitoring and Assessment


The start with price points is all about testing. It is important to run various tests to know and anticipate consumers’ needs and expectations. Most often, companies use A/B testing as a starting point. It is a popular approach allowing businesses to run a simple test and find a potentially good price point.

Advanced Solutions

After setting the foundation, it is time to harness its power with an advanced solution. When testing is done by humans, there is a human factor involved. Namely, it means there is a high chance of human error involved. Advanced solutions use Artificial Intelligence (AI) and Machine Learning (ML) to make testing as accurate and precise as ever. You can access scalable, safe, and actionable pricing with such a digital aid.


The third method entails optimizing price points through a distinct analysis process. Raising the bar on price is possible if the product’s quality is a great match for its price. In such a case, analysis allows you to determine the correlation and understand whether setting a higher price point has a solid quality-based foundation. Besides, analyzing a price point is a great way to increase revenue when your stock is dwindling, and scarcity kicks in.

Skimming Model with Entry Points

This approach focuses on setting the proper price point for businesses entering a new market. In a nutshell, companies of all shapes and sizes can use price points to maximize their revenue. It is best to use the strategy when entering the market or to introduce a new product.

For instance, look at Sony. After several weeks of introducing the sony Playstation 3 to the market, the company set a price for the product at around $300. However, as the product was introduced, the price was $600. Sony used the skimming model and earned profits by understanding the customer needs and setting proper price points based on this information.

Price Perception

The next method is linked to price perception. As you might have anticipated, this approach is about how consumers view your brand and your brand through the price factor. In essence, when making a purchase, your customer should be comfortable with the given price point and understand that they spend money for a product that will bring them value. In such a case, you must have a psychological portrait of your target audience. With this in mind, you can use the information to provide the best purchasing experience.

Building Up the Right Price Point

This method is great for boosting brand awareness. Often, you need to offer something more than a mere product or service. That is why companies provide package deals or give consumers something for free along with the purchased product. In such a case, bundling is a viable strategy for setting price points. As a result, this price point strategy can be a game-changer in the right hands.

Monitoring and Assessment

The final strategy of working with price points entails monitoring prices always to be one step ahead of the competition. Track the market and track your rivals to understand what particular factors influence purchasing decisions. Based on monitoring and assessment results, you can establish correct price points and boost revenues.

The Bottom Line

In the right hands, various price point strategies offer different results. Besides, you need to know when to use a given approach to get the maximum output. In such a case, the recipe for success with price points, you need to know the nature of the phenomenon, consider the importance of price thresholds, and use at least one strategy mentioned above.