Pricing strategy cases are less common—but incredibly powerful. They test your ability to think through customer psychology, market dynamics, and financial impact, all at once. Whether launching a new product or adjusting prices for an existing one, your goal is to recommend a pricing model that maximizes profit while staying competitive.
In this article, we’ll walk through three common approaches—value-based, cost-based, and competitive—and how to structure your answer in a case interview.
1. Clarify the Context
“Our client has developed a smart kitchen scale with built-in AI recipes and wants to know what price to charge.”
Start by asking a few key questions:
- Is this a new product or a re-pricing?
- What is the client optimizing for: revenue, profit, market share?
- What segment are we targeting?
- What’s the pricing model: one-time, subscription, bundled?
2. Explore the Three Main Pricing Approaches
Use these as branches in your framework and then go deeper based on case data.
• Value-Based Pricing
Start with the customer: how much value does the product create, and how much are they willing to pay?
- What problem does it solve?
- How much does it save them (time, money, hassle)?
- What are they paying for alternatives?
“Given the value of automated meal planning, we estimate customers would be willing to pay $15/month.”
• Cost-Based Pricing
Useful as a floor price—ensures profitability but ignores customer perception.
- COGS (Cost of Goods Sold)
- Overhead and distribution
- Target margin (e.g., 40–60%)
“With a COGS of $40 and desired margin of 50%, we’d set a floor price of $80.”
• Competitive-Based Pricing
Benchmarks against direct or indirect competitors. Good for commoditized markets.
- What do similar products cost?
- Is our brand stronger or weaker?
- Is there room to price higher due to added features?
“Competitors charge $99 for similar scales without AI—so we could justify a $129 premium.”
3. Consider Price Model & Segmentation
Think beyond a single price. How will we charge?
- One-time fee vs. recurring subscription
- Bundling (product + service)
- Freemium or trial model
- Tiered pricing by customer segment
“We could offer the device for $79 with a $5/month AI recipe subscription, or bundle it all into a one-time $149 premium version.”
4. Run Sensitivity or Breakeven Calculations
In some cases, you’ll need to estimate volumes and profits at different price points. Consider:
- Estimated demand elasticity (how price-sensitive is the segment?)
- Impact on volume and margin at different price levels
- Breakeven volume at various price points
5. Make a Recommendation
Close with a confident pricing recommendation, tied to strategic goals and customer insight. Propose an A/B test or pilot if uncertainty remains.
“Given the perceived value, market positioning, and competitive landscape, I recommend launching at $99 with a freemium trial for the first month and a $10/month subscription after that.”
Final Thoughts
Pricing strategy cases are a chance to blend business intuition with quantitative logic. Use structure to avoid guessing—and make sure your pricing solution aligns with what the client values most: profit, volume, or positioning.
Price isn't just a number—it's a signal. Make sure yours sends the right message.