Penetration pricing is a strategy where a startup sets a low initial price to quickly attract customers and gain market share. Once traction is built, the price is gradually increased to improve margins and reflect the product’s true value.
Why it matters for startups
This approach is powerful in competitive markets or when entering a saturated space. It helps break through noise, attract early users, and build brand awareness fast. For investors, it signals an aggressive go-to-market strategy focused on scale.
What’s the goal of penetration pricing?
To gain users quickly and build a customer base before gradually increasing the price once you’ve proven value.
How do I raise prices later without losing customers?
Communicate clearly, add new value (features, support, etc.), and consider gradual price increases or grandfathering.
Is penetration pricing sustainable?
Not long-term. It’s a short-term growth tactic. You’ll need a clear plan to transition to a profitable model.
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