How to set a price: from hardware to SaaS, a B2B guide.

Price is the only variable in a business model that can have an immediate impact on margin and revenue, without additional investment, development time, or resources.

And yet, in most B2B companies, pricing is the least structured part of the commercial approach. Prices are based on costs, gut feeling, or whatever the competition is charging.

That's suboptimal.

This article provides a structured overview of the most relevant pricing models, from hardware to SaaS, and explains the key criteria for choosing between them.

The three basic approaches to pricing

1. Cost-plus pricing

The simplest approach: production cost plus a target markup equals the price.

The advantage: it's easy to calculate and easy to explain internally. The disadvantage: it completely ignores what the customer is willing to pay. As a result, it can systematically lead to underpricing or overpricing.

2. Competitive pricing

The price is based on the market and what competitors are charging. Useful as a reference point, but not as a strategy on its own.

The problem: if you always price relative to competitors, you end up in a price war that can only be won through volume.

3. Value-based pricing

The price is based on the economic value the product creates for the customer. It's the only approach designed to systematically capture more of that value, because it asks the right question:

How much is the problem we're solving actually worth?

"The price isn't what the product costs. The price is what the problem costs that the product solves."

Hardware pricing: the basic calculation

If you're pricing based on a target markup:

If you're pricing based on a target gross margin:

Markup and margin aren't the same thing: a 50% markup on cost works out to a 33% margin, not 50%. Which of the two your organization actually targets should be clear up front, otherwise the team ends up calculating against two different numbers.

What often gets overlooked in hardware pricing are the less obvious costs:

• Return rate (1–5% depending on the product category) needs to be factored into the price
• Warranty reserve: what's the defect rate during the first 24 months?
• Inventory carrying costs: capital tied up in inventory reduces liquidity
• Currency risk when manufacturing costs are incurred in a foreign currency
• Tariffs and import duties for international markets

Pricing models at a glance

Bundle strategy: how to bundle effectively

A good bundle isn't simply one product plus another. It's a solution that addresses a complete problem while including elements that might be difficult to sell individually.

The golden rule: bundles work when the perceived value is higher than the sum of the individual prices, while the bundle price itself is lower. That difference creates the incentive to buy.

A classic bundle structure is Good / Better / Best, three tiers. The middle tier is designed to attract the majority of purchases (decoy effect). The "Best" package primarily serves as an anchor, making the middle option appear more attractive.

Discounts: when, how much, and for whom

Discounts are one of the most frequently misused pricing tools, and one of the fastest ways to destroy margin.

Any discount that isn't tied to something of value in return tells the customer: our original price was too high.

Discounts are justified when:

• Volume: the customer buys significantly more (volume pricing, annual contracts)
• Commitment: an annual contract instead of monthly (10–15% is common)
• Reference value: the customer agrees to become a case study, speaker, or reference customer
• Early payment: payment within 10 days instead of 30 (2/10 net 30 terms)
• Strategic partnership: joint market development rather than a one-off transaction

Discounts are never justified simply because "the customer wants to pay less."

That's not a reason for a discount. It's an objection that needs to be addressed through value, not a price cut.

The discount rule

Pricing psychology in B2B: what actually works

CFOs may approach decisions rationally, but price perception is always relative and influenced by emotion.

• Anchor pricing: show the highest price first (the Best package). Everything that follows appears more affordable.
• Charm pricing: CHF 14,900 instead of CHF 15,000, also shown to be effective in B2B.
• Decoy effect: a strategically positioned third option makes the preferred option more attractive.
• Breaking down the price: "CHF 850 per month" feels different from "CHF 10,200 per year," even though the total is the same.
• ROI framing: "At 3 hours saved per week, the investment pays for itself in 4 months" beats a simple price comparison.

Pricing psychology isn't manipulation. It's the art of communicating a fair price in a way that makes its value clear.