How to price products for retail: Promotional and pricing strategies

You've spent years perfecting your formulation and packaging. You've sweated blood, tears and every ounce of your creative juices reaching the point where you're finally happy with your brand.

Now comes some more hard work: finalising the commercial element – how to price products for retail and how to build a smart, sustainable promotional strategy to match.

This might be something well out of your comfort zone. But in this blog, we demystify the key decisions you need to make next, from understanding your target customer to building a strong pricing strategy in retail and selecting the right promotional pricing tactics to support your business goals.

By the end, you'll have a clear idea of how to position your brand for commercial success – and make sure both customers and retailers see the value in what you're offering.

1. How to price products for retail

Pricing your product for retail can feel like one of the most daunting steps in your journey to market.

You've put so much into getting the product just right, but now you need to make sure the price reflects both the value to your customer and your long-term commercial goals.

There are a few pricing models to consider:

• Cost-plus pricing: This is a simple model where you add a margin on top of your cost price. It's straightforward, but doesn't always reflect what the market will bear.

• Value-based pricing: This focuses on what your customer is willing to pay, based on the perceived value of your product. Great for premium or unique propositions.

• Competitor-based pricing: Useful when entering a saturated market. You look at what similar products are charging and position yourself accordingly.

• Channel-specific pricing: Remember, the price you set might need to flex slightly depending on the retail channel (for example, online vs. in-store, direct-to-consumer vs. wholesale).

The key is to strike a balance between commercial viability and customer appeal. And always build in enough margin to fund future promotional activity.

Read more:

• Cost-based vs. value-based pricing: Which is right for you?

2. Understanding your target customer

At this point in your product development, you should've made a final decision about who your target customer might be.

You should also have a good understanding of their spending power and their sensitivity to price.

This should formulate a huge part of the decision around recommended retail price (RRP). Don't price your target customer out of your brand. Make sure the RRP and any promotional activity looks achievable for them.

Also, your promotional activity must support your strategy as above. To drive penetration, a price point promotion would be most sensible. But if you're focused on average weight of purchase (AWP), for example, a multibuy would be preferable.

3. Market assessment and competitive pricing

You must fully assess the market you'll be launching into. You'll need to make sure you're pricing and promoting your brand so it either:

• fills a gap in the pricing hierarchy in the market, or

• allows access to new customers so that they can trial it with limited risk

Also be aware of the pricing ceiling in the marketplace. Very few new brands can launch at a higher price than the brand leader.

4. Retailer requirements and positioning

Visit the stores or online shops of the retailer (or retailers) in which you're looking to launch. Once there, assess whether your RRP and promotional activity are viable.

• Is your RRP in line with the competitors the retailer has listed?

• Does it give you a clear position in that retailer's range?

Look at what type of promotion the retailer is running in your category. Do they often run cross-category promotions (for example, "3 for 2 across all skincare") or are there more single price point promotions?

This will give you a clear idea of what activities are successful in your chosen retailer, so you can create a promotional plan to fit.

5. Building a promotional price strategy

Next, ask yourself what is your strategy when it comes to commercially launching your brand? You have several options here.

• Do you want to gain as much product reach as possible, and brand penetration into as many households as you can?

• Do you want to drive average weight of purchase (AWP) to make sure your customers are spending as much as possible with you?

• Are you targeting frequency of purchase (FOP) and getting customers to buy your product more often?

Penetration, AWP and FOP are the key levers that will generate sustainable brand growth. (See the Retail pricing definitions section below for an explanation of these key terms.)

You can use a selection of these levers during the product lifecycle to drive different customer behaviour at different times.

6. Types of promotional pricing techniques

Promotional pricing is one of the most effective tools for driving early interest in your brand. But not all promotions are created equal.

Think carefully about what's right for your product, your goals and your customer.

Here are some popular types of promotional pricing:

• Price point promotions: A straightforward discount (for example, "£9.99 instead of £12.99") to encourage trial.

• Multibuy offers: Offers like "2 for £20" are great for driving AWP and encouraging customers to stock up.

• Buy one get one free (BOGOF): A classic tactic for high-volume or fast-moving products.

• Bundle pricing: Grouping products together at a discounted rate. Good for product discovery or gift sets.

• Introductory pricing: A limited-time launch price to build excitement and awareness.

• Flash sales: Short-term promotions that create urgency, often used online or during key seasonal events.

Choose your promotional pricing strategies based on what behaviour you're trying to encourage. And always make sure you're not eroding your margin beyond sustainability.

7. Aligning promotions with purchasing patterns

When working through your promotional plan, also consider your brand's purchasing pattern.

This means thinking about how often a customer will return to buy your product, then creating promotional timings that work within the repurchasing pattern.

If your brand is highly seasonal, make the most of it with promotions that will generate you a high level of market share.

8. Profit margins and long-term viability

Obviously, throughout this entire process, your future profitability needs to remain at the forefront of your mind.

Ideally, you'd decide your RRP and promotional strategy before finalising your formulation, packaging and branding.

That way, you know you have a rounded commercial proposal that will be profitable for you in the future.

However, before you present your brand to any retailer, you must at least have a clear pricing and promotional strategy.

Not only does this show you're confident that you can financially deliver what you promise, but it signals to the retailer that your brand has commerciality.

This may seem like a time-consuming process. But get it right first time and you'll stand a much better chance of:

• being profitable

• gaining a loyal customer base

• having a strong position against your competitors

• being able to invest in your brand's future

VIDEO: How selling to retailers can scale your business

Ami Rabheru, founder of The Retail Business Hub, shares her best strategies for approaching, pitching to and selling to retailers:

9. Common mistakes in pricing and promotion in retail

Even the most creative and passionate founders can fall into some common traps when it comes to pricing and promotion in retail. Avoiding these early on can save you a lot of stress (and cash) down the line.

Here are a few to watch out for:

• Overpricing based on passion, not the market: Just because you know how much love went into it doesn't mean a customer will pay more without brand recognition.

• Launching with constant discounts: This can train customers to never pay full price and damage your brand's perceived value.

• Not budgeting for promotions: You need to plan and factor promotional activity into your margins from the outset.

• Ignoring the retailer's promotional mechanics: Retailers have tried and tested methods. Going against their usual promotional rhythm might limit your success.

• Failing to track ROI on promotions: Not every promotion delivers. Make sure you're measuring impact, not just volume.

Remember, your pricing and promotional activity sends a message to your customer. Make sure it's the one you want your brand to be known for.

Checklist: Your retail pricing strategy toolkit

Before you finalise your pricing strategy in retail, here's a quick checklist to keep you on track:

• Have you defined your target customer and their sensitivity to price?

• Is your RRP realistic in the context of your category and competitors?

• Do you know your costs and margins, including allowances for promotions?

• Have you built a promotional price strategy that matches your growth goals (penetration, AWP, FOP)?

• Have you researched retailer mechanics to understand what works where?

• Have you planned promotions around your purchase cycle or seasonality?

• Are you set up to measure success and adjust accordingly?

Nailing this checklist doesn't just help you land listings – it helps you build a profitable, resilient brand that customers trust.

Retail pricing definitions

Not sure what some of the retail terminology means? Here's a quick guide to help you understand the key concepts that underpin pricing and promotion in retail.

• Average weight of purchase (AWP): The average amount of product a customer buys per trip. Increasing AWP usually means encouraging customers to buy more items or bigger packs each time they shop.

• Brand penetration: The percentage of households (or customers) that buy your brand at least once in a given time period. The more people who try your product, the higher your brand penetration.

• Cross-category promotion: A promotion that spans more than one product category – for example, "3 for 2 across all skincare". These are often run by retailers to drive basket size and encourage trial across brands.

• Frequency of purchase (FOP): How often a customer returns to buy your product again. A key driver of long-term success and customer loyalty.

• Product lifecycle: The journey a product goes through from launch to decline. Typically includes introduction, growth, maturity and (eventually) decline. Pricing and promotional tactics often shift depending on the stage.

• Purchasing pattern: The typical rhythm or behaviour of how customers buy your product – for example, is it something they purchase weekly, monthly or seasonally?

• Recommended retail price (RRP): The price that you, as the brand, suggest your product should sell for in store. It sets a benchmark, though retailers may adjust based on their own strategy.

• Single price point promotion: A promotion where different products are temporarily priced the same – for example, "£5 each". This simplifies the offer and can make decision-making easier for the shopper.

Final thoughts

Finalising your pricing and promotion in retail is one of the most commercially critical steps in your launch journey.

Done well, it gives you a solid foundation for profitability, growth and customer loyalty.

Take the time to understand how to price products for retail in a way that aligns with your target audience, your competitive set and the retailers you're aiming to work with.

Build a promotional price strategy that supports your goals – whether it's driving trials, increasing purchase frequency or boosting average spend.

This may seem like a time-consuming process. But get it right first time and you'll stand a much better chance of being profitable, gaining a loyal customer base, having a strong position against your competitors and being able to invest in the future of your brand.

Relevant resources

• How to price your products and services

• Lunch and Learn: Pricing for confidence and profit

• Lunch and Learn: How to charge correctly as you scale