Updated on 12 May 2026
Most Startups we meet have very similar pricing strategies. Here, I will attempt to detail the basic to advanced strategies used by some of the best Startups in Southeast Asia. Different strategies have different effects, so do use this as a guide to handling your sales & marketing challenges!
A pricing strategy is a model or method used to establish the best price for a product or service. It helps you choose prices to maximize profits and shareholder value while considering consumer and market demand.
Today, pricing strategies are also heavily influenced by:
I will split these strategies into two main categories - one for Marketplace startups (supply and demand based) and one for SaaS Startups (Software as a Service). While these strategies are likely used by the respective business models, it does not mean that a Marketplace cannot use a SaaS pricing strategy and vice versa. I will not be covering any pricing strategies for traditional businesses like retail or service businesses.
Example Marketplace companies include Uber, Lazada, foodpanda, Grab etc. These are companies that have a platform that caters to a Supply-side and a Demand-side - hence the term 'marketplace'. These pricing strategy used by platform businesses are covered below:
The Psychological pricing strategy is pricing similar or the same products differently to drive sales for the cheaper product. McDonald's does this with Value Meals in order to capture high margins with Coke and Fries as well as to reduce the ordering decision time to keep queues short and profits high. This pricing strategy works if you have multiple products that complement each other.
Psychological pricing that depends on the time a product or service may expire. This is often for event-based services or perishable goods where the price may be discounted closer to the end of the product or service life.
For example, Lazada and Shopee offer price cuts during festive campaigns like 11.11 or 12.12 to create urgency in purchasing behaviour and drive sales up. This pricing strategy works well when you can pressure customers using a limited time offer.
Dynamic pricing is pricing that changes according to demand and supply principles. Dynamic pricing is used by platforms like airlines or Startups like Uber and Grab to encourage or discourage transactions at different times.
It should be noted, however, that many platforms cap the lower end of dynamic pricing so that they can earn a minimum fee.
This pricing strategy works well if you are in multiple geographies or have barriers between different segments of customers. This pricing strategy also works well if the supply and demand conditions are fluctuating variables.
Selling key products at a very low price (even below cost) to stimulate sales of other products.Some Startups like Dropbox or Google offer products like Gmail at a loss in order to tie in customers on other products like Google Workspace or other premium services.
This pricing strategy works well if you have multiple products, and a low cost or high margin product that has high demand.
Example SaaS companies include Google, Spotify, Slack, etc. These are companies that sell subscription software services. These pricing strategies are listed below:
Starting with a high price for early customers and lowering the price as you cover your investment costs. Often, Startups that target enterprise clients early on would charge higher prices to cover development costs and then use that same software to sell to SMEs at a lower price later on.
Providing a product or service for free, and then charging for advanced features.
A good example is Google Workspace which starts free or low-cost until you want to upgrade the space & feature limitations. Users may find it hard to switch to another competitor due to high switching costs like moving data and re-training teams.
Pricing strategies like that work well with very high margin software products.
Offering products at higher prices vs. competitors but offering discounts on key items to ensure the price is lower. Often, SaaS startups price similarly to competitors but apply a discount on yearly plans to compete in price and to secure stable cash flows and upfront cash-in-bank. Pricing strategies like that work well if you are in a highly competitive market and need to nudge the customers.
Limit pricing the product below the competitors' cost to enter the market to discourage their entry into the market. Usually only executed by successful Startups, costs would be optimised by the economics of scale and scope. Then, they would have additional margins to lower the price below the competitors' costs and yet still make money for themselves. Pricing strategies like that work well if you are in an extremely competitive market with low barriers to entry - and if there is also cost savings on higher volumes.
Mostly done by early-stage Startups, penetration pricing means to start off at a heavy discount. These Startups would start off with pilot programs or heavy early-bird discounts to build up the trust of customers until they have a few big brand logos to show other customers. Pricing strategies like that work well if you are new, but is not very sustainable in the longer term.
This aggressive pricing strategy aims to drive out competitors and is illegal or highly regulated in some countries.A good example is Uber, which heavily subsidised rides in its earlier years to compete against taxis and ride-hailing competitors.
It is also a dangerous act, as it requires a lot of cash to execute - and can cause complete business failure if funding dries up.Pricing strategies like that are rarely sustainable in the long-term and should be used only with extreme caution.
An artificially high price that encourages positive brand perceptions from buyers. Often done by premium services, it tries to create a perception of a higher reputation, prestige, quality, and desirability. Pricing strategies like that work well when customers' perceptions are affected positively by high prices. An example is Tiffany & Co. which sells jewellery at higher-than-average prices so that customers can enjoy the prestige associated with the brand.
Price discrimination is to have different prices in different market segments or countries. A good example is Spotify, which sells subscriptions at different prices across countries to maximise adoption and profits based on purchasing power. Pricing strategies like that work well if you have different customers segments in different geographies.
A pricing based on the value it creates for the customer. Some of the best Startups maximise value by charging less than the value they create for the customer, to ensure pricing makes sense commercially.
For example, if your service saves or creates $100,000 annually for a customer, charging $30k–$70k may still be reasonable depending on switching costs and ROI. Today, enterprise SaaS companies increasingly use ROI calculators and value metrics to justify pricing.
Variable pricing based on unit economics like:
Often, this is coupled with a floor price to cover fixed costs like onboarding or support costs.
For example, many SaaS Startups may charge something like:
Usage-based pricing has become significantly more popular in AI and cloud software businesses.
To determine the best pricing strategy for your business requires serious thought. An important factor is to align your pricing model with the value your customers see. You can't sell too cheaply and expect strong margins, while selling too expensively may slow adoption.
Figuring out your customer's journey and how they perceive the value of your product will help you determine:
A great factor in deciding which pricing strategy is best is figuring out your business goals.
Are you going for:
Low margins allow faster growth, but higher margins improve sustainability. You also want to think about:
It is important to know that each company can have a unique pricing model. Markets are highly dynamic and can change business models almost overnight. Adapting to the right pricing model is crucial for business continuity. Pricing strategies can also vary by product or customer segment so that your competitive advantage and profitability can be optimised in greater detail.
Not one pricing strategy fits every customer, so you may even see custom pricing models for:
These pricing strategies are among those that I have observed serving over 2,000 Startups at NEXEA Group Sdn Bhd (Formerly known as NEXEA Angels Sdn Bhd), our Startup Fund (SEA), Startup Accelerator (Malaysia), and Angel Investor Network. With these pricing strategies, I hope you can conquer your market and keep the competition at bay. If you found this interesting, do share so that others can learn too!
