--- name: 17-pricing-strategy-global description: "Use when a price has to be set or changed — value-based pricing, anchoring, charm pricing, decoy tiers, good-better-best packaging, discount policy, and margin math, with currency psychology for US, EU, SEA, and LATAM plus dropshipping markup and BE-ROAS. Trigger on 'pricing strategy', 'how much should I charge', 'should I raise prices', 'price tiers', 'customers say it is too expensive', 'dropshipping markup'. Also use when the product is not selling and the user suspects price is the reason. Not for — bonuses, guarantee, and value stack around the price, see `31-offer-design-global`; persuasion beyond price, see `16-marketing-psychology-global`; ad budget math, see `10-reverse-kpi-global`." metadata: version: 1.0.1 category: strategy license: MIT triggers: - "pricing strategy" - "price positioning" - "charm pricing" - "pricing psychology" - "dropshipping markup" related: - product-marketing-context-global - 16-marketing-psychology-global - 29-dropshipping-mastery-global - references/global-currency-pricing --- # Pricing Strategy (Global) > Price is the most leveraged decision in marketing. A 1% price increase typically yields a 10%+ profit improvement (Bain). Currency psychology, decimal conventions, and installment culture differ HUGELY by region. --- ## For newbies ### Who is this skill for? | Audience | Concrete example | |----------|------------------| | Founder setting initial pricing | First product launch, no historical data | | DTC brand optimizing pricing page | Already selling, want to lift conversion or margin | | SaaS deciding tier structure | Free / Pro / Enterprise; monthly vs annual | | Dropshipper calculating markup | Importing from supplier, selling DTC | | Service business packaging offers | Coaching, consulting, agency retainers | ### Who is this NOT for? - **Vietnam-only pricing** -> Use `17-pricing-strategy` (VN skill) — covers VND psychology - **Already at scale with strong data team** -> You probably have proprietary models; this skill gives you starting frameworks ### 30-second pre-read This skill produces ONE pricing strategy file with 7 components: pricing model selection, price ladder design (3-5 tiers), charm/anchor/decoy mechanics, break-even analysis, competitor benchmarking, A/B test plan, and pricing page layout. Pick 1 of 4 region variants — the variant tunes currency formatting, decimal convention, charm pricing styles, and installment culture. ### 3 common errors 1. **Using US charm pricing in EU** -> EU shoppers see `$9.99` as "American" not "low" — feels foreign 2. **Ignoring installment culture in LATAM** -> "BRL 1,200 to MXN 8,000" pricing flops without "12x R$100" or "8 cuotas sin intereses" 3. **Underpricing dropship products** -> 2x markup leaves no room for ad spend; need 3-5x minimum --- ## Why do you need this skill? Without pricing strategy: - Charm formatting wrong for region -> "feels off" -> conversion drop - No anchor -> middle tier doesn't feel like value -> wrong tier wins - No installment option in LATAM -> abandoned cart 60%+ - Dropship markup too thin -> can't afford ads -> stalls - No charm psychology in B2C -> leaving money on the table Pick the right region defaults, apply proven frameworks, layer on dropshipping math when relevant. --- ## Workflow ``` Step 0: Check global context file |-- exists -> read product / customer / region info |-- missing -> suggest user run product-marketing-context-global first Step 1: Pick region variant (US / EU / SEA / LATAM) Step 2: Choose pricing model (One-time / Subscription / Tiered / Bundle / Freemium / Pay-as-you-go) Step 3: If dropshipping product -> apply markup math (this file, see below) Step 4: Design price ladder (3-tier with charm + anchor + decoy) Step 5: Calculate break-even Step 6: Compare with 2-3 competitors Step 7: Write pricing page copy + A/B test plan ``` --- ## Step 0: Check global context Check `.agents/product-marketing-context-global.md`: - **Yes** -> Read product, customer, region. Do NOT re-ask. - **No** -> Suggest running `product-marketing-context-global` first. --- ## Step 1: Pick region variant Ask: **"Which is your PRIMARY region: US, EU, SEA, or LATAM?"** ``` Where do you primarily sell? |-- US / Canada --> 01-us.md (USD, charm $9.99, monthly subs) |-- EU / EEA / UK --> 02-eu.md (EUR, charm EUR 9,99, VAT-inclusive) |-- Southeast Asia --> 03-sea.md (SGD/MYR/IDR/THB/PHP, discount-heavy) |-- Latin America --> 04-latam.md (BRL/MXN/ARS, parcelado / cuotas common) |-- Vietnam only --> Use `17-pricing-strategy` (VN skill) ``` --- ## Step 2: Pricing models | Model | Best for | Examples | |-------|---------|---------| | **One-time** | Physical products, courses | T-shirt, ebook, lifetime license | | **Subscription** | Recurring value, software | SaaS, streaming, gym, supplement | | **Tiered** | Differentiated buyers | SaaS Free/Pro/Enterprise | | **Bundle** | Bigger AOV, perceived savings | Spa package, software bundle | | **Freemium** | Large funnel, low conversion | Slack, Zoom, Notion | | **Pay-as-you-go** | Variable usage | Cloud, API, AWS | | **Hybrid** | Combination of models | Subscription + add-on usage credits | --- ## Step 3: DROPSHIPPING MARKUP MATH (CRITICAL) > **This section applies only if you're sourcing products from suppliers (AliExpress, Spocket, CJDropshipping, etc.) and reselling DTC.** ### The 3-5x markup rule Dropshipping requires HIGH markup because: - Ad spend is ~40-60% of revenue (paid acquisition is your only growth channel) - Returns/refunds: 5-10% loss - Payment processing: 2-3% per transaction - Platform fees (Shopify): 1-2% - Customs/duties (if cross-border): 5-15% **If your markup is only 2x cost, you have ZERO budget for ads.** You need 3-5x minimum. ### The math ``` Cost from supplier: USD 5.00 Shipping to customer: USD 3.00 Total cost: USD 8.00 Sale price: USD 29.99 (3.75x markup) Revenue: USD 29.99 - Cost USD 8.00 - Payment processing USD 0.90 (3%) - Platform fee USD 0.30 (1%) = Gross profit USD 20.79 = Gross margin 69.3% Of that USD 20.79 gross profit: - Ad spend cap USD 14.55 (70% of profit) - Operations USD 2.08 (10%) - Net profit USD 4.16 (~14% net margin) ``` ### Break-Even ROAS (BE-ROAS) formula ``` BE-ROAS = 1 / (1 - cost/sale_price) Example: - Cost USD 8, sale USD 29.99 - cost/sale = 0.267 - BE-ROAS = 1 / (1 - 0.267) = 1 / 0.733 = 1.36x Translation: Your ads must return AT LEAST USD 1.36 for every USD 1 spent just to break even. Profitable target: 2.5x or higher. ``` ### Markup tiers by product price | Product cost | Recommended markup | Sale price | BE-ROAS | Profit ROAS target | |-------------|-------------------|-----------|---------|-------------------| | < USD 5 | 5-10x | USD 25-49.99 | 1.25x | 2.5x | | USD 5-15 | 4-5x | USD 49-79 | 1.40x | 2.7x | | USD 15-30 | 3-4x | USD 79-129 | 1.55x | 3.0x | | USD 30-60 | 2.5-3x | USD 129-199 | 1.75x | 3.2x | | USD 60+ | 2-2.5x | USD 199+ | 2.0x | 3.5x | ### The dropshipping price ladder ``` Free shipping threshold: USD 50 (push AOV up) Lead-in product: USD 19.99 (small impulse buy, charm) Core product: USD 39.99 (target sale, charm) Premium variant: USD 79.99 (anchor + upsell) Bundle: USD 99.99 (3 products, "save 25%") ``` --- ## Step 4: Design price ladder (universal — non-dropship) ### Standard 3-tier structure ``` Goi 1 - Basic / Starter: [low charm price] - 3-4 features - "Try free" Goi 2 - Pro / Standard: [middle anchor] - 7-8 features - "Most popular" badge Goi 3 - Premium / Enterprise: [high price] - All features - "Contact sales" ``` ### Charm pricing (apply per region — see variants) - US: `$9.99` `$29` `$99` - EU: `EUR 9,99` `EUR 29` `EUR 99` - SEA: `S$9.90` `RM39` `Rp 99,000` - LATAM: `R$ 99` `MX$199` `12x R$ 33` (parcelado) ### Anchor effect ``` Goi Premium: USD 199 (anchor — rarely sold) Goi Pro: USD 99 (target — 60-70% choose) Goi Basic: USD 29 (entry — price-sensitive) ``` ### Decoy effect (3-option trap) ``` A. Digital only: USD 50 (poor value) B. Physical only: USD 120 (decoy - close to C, less value) C. Digital + Physical: USD 130 (target - "+USD 10 gets BOTH") ``` Add decoy B -> ~3x lift in choosing C vs. without decoy. --- ## Step 5: Break-even analysis ``` Break-even units = Fixed costs / (Price per unit - Variable cost per unit) Example: - Fixed costs: USD 30,000/month - Sale price: USD 99 - Variable cost: USD 39 (cost + shipping + processing) - Contribution: USD 60 - Break-even: 500 units / month ``` --- ## Step 6: Competitor benchmarking Compare with 2-3 direct competitors: ``` | Competitor | Their price | Their feature | Your price | Your feature | |------------|-------------|--------------|------------|--------------| | Comp A | USD 89 | [feature] | USD 99 | + extra | | Comp B | USD 129 | [feature] | USD 99 | + extra | | Comp C | USD 79 | [feature] | USD 99 | premium tier | ``` ### Pricing positioning vs. competitors - **Premium** (+20% or more above): Justify with quality/result/brand - **Parity** (within +/- 10%): Win with feature/service/UX differentiation - **Value** (-15-25% below): Win with operational efficiency, not loss-leading --- ## Step 7: Pricing page + A/B test plan ### Pricing page must-haves | Element | Why | |---------|-----| | 3 tiers (not 1, not 4+) | Easy comparison; 3 is the sweet spot | | Highlight middle tier | Anchor + decoy effect | | Monthly / Annual toggle | Annual locks in cash; -15-20% discount | | Feature comparison table | Decision support | | FAQ | Address pricing objections | | Customer testimonial | Social proof | | Trial / refund policy | Risk reduction | | Visible price (B2C) | "Contact sales" kills B2C conversion | ### A/B test priority 1. Price level (e.g. USD 29 vs. USD 39 — biggest impact) 2. Charm format (USD 29 vs. USD 29.99) 3. Tier structure (2 vs. 3 tiers) 4. Annual discount % (15% vs. 20% vs. 25%) 5. CTA copy ("Start free" vs. "Try Pro free") Run each test for 2 weeks minimum, 95% confidence. --- ## Output template ```markdown # Pricing Strategy - [Brand] Region variant: [US / EU / SEA / LATAM] Currency: [USD / EUR / etc.] Date: [YYYY-MM-DD] ## 1. Pricing model [One-time / Subscription / Tiered / Bundle / Freemium / Pay-as-you-go] ## 2. Price ladder | Tier | Price | Target buyer | Features | CTA | |------|-------|--------------|----------|-----| | Basic | X | Price-sensitive | [...] | "Try free" | | Pro | Y | Target buyer | [...] | "Most popular" | | Premium | Z | Anchor + premium | [...] | "Contact sales" | ## 3. Charm / anchor / decoy mechanics - Charm: [region-appropriate format] - Anchor: [premium tier explanation] - Decoy: [if used] ## 4. Dropshipping markup (if applicable) - Cost: USD X - Sale: USD Y - Markup: Nx - BE-ROAS: 1.Xx - Target ROAS: 2.Xx ## 5. Break-even [Formula + monthly target] ## 6. Competitor positioning [Premium / Parity / Value] ## 7. Pricing page layout [3 tiers + comparison + FAQ + testimonial] ## 8. A/B test plan [Test 1, Test 2, Test 3 with metrics] ``` --- ## Quality checklist - [ ] Region variant chosen + currency formatted correctly - [ ] 3 tiers (not 1, not 4+) - [ ] Middle tier highlighted (anchor + decoy) - [ ] Charm pricing applied per region convention - [ ] If dropshipping: markup >= 3x cost, BE-ROAS calculated - [ ] Break-even units / month documented - [ ] 2-3 competitors compared - [ ] Pricing page mockup or wireframe - [ ] A/B test plan with success metric - [ ] Installment / financing option for LATAM/SEA where relevant --- ## Related skills - `product-marketing-context-global` — foundation - `16-marketing-psychology-global` — anchoring, scarcity, framing - `29-dropshipping-mastery-global` — for dropshipping deep-dive (when available) - `references/global-currency-pricing` — deep currency reference --- *Global Skill 17 (Pricing Strategy) | Over Powers Agency | v1.0.0*