Penetration price strategy

New businesses rely on clear and powerful differentiators to stand out from the competition. For many consumers, nothing makes their buying decision easier than price. A penetration pricing strategy is built on this concept. By entering the market with a low price, businesses aim to attract customers quickly—then gradually raise their price.

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Penetration Pricing

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Penetration Pricing

Sometimes referred to as the "land and expand" approach, penetration pricing strategy is an approach used by companies especially in SaaS to penetrate or infiltrate a new market, or rapidly expand in their current market. This means setting a very low initial price on a product in the short-term, with the goal of compensating in the longer-term by upselling or cross-selling the new customers they gain. Sometimes, companies with a new offering may use penetration pricing to garner a large market share of customers before any obvious competitors come into the arena. Learn how to prioritize by making it a simple process, to build products that stand out. Learn more about how to source insight, choose the right prioritization framework and much more.
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5 of the Best Penetration Pricing Examples

You often see the tagline "special introductory offer" — the classic sign of penetration pricing. The aim of penetration pricing is usually to increase market share of a product, providing the opportunity to increase price once this objective has been achieved. Penetration pricing is the pricing technique of setting a relatively low initial entry price, usually lower than the intended established price, to attract new customers.
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But, penetration pricing can help. Based on the idea that everyone loves a good deal, penetration pricing helps you gain footing in a new market by competing on price. Offering a significantly lower price than what people expect helps you acquire customers faster.
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