10 effective international pricing strategies for your global expansion

You’ve created an amazing product thriving in your home market, and now you’re ready to go global: introduce it to the rest of the world.

But here’s the catch — how do you price it in different countries?

International pricing strategy isn’t just about converting currencies. It’s the art (and science) of finding the right balance between market dynamics, customer expectations, and profitability: understanding how different regions work, what customers want, and how to stay competitive without losing sight of your bottom line.

McKinsey research shows that companies using market-driven pricing strategies can boost their EBITDA by 2-7%. Whether you’re a startup entering a new market or a well-established business growing globally, your pricing decisions are a key factor in whether you succeed.

This guide will walk you through key international pricing strategies and factors that may affect which one you’ll implement.

Understanding the context: Dr. Souza’s 7Cs of international pricing

Think of the 7Cs as your international pricing compass – they help you navigate global pricing by laying out all the factors you need to be aware of when determining your product’s price. 

Let’s see what each of them means:

Costs	Development and manufacturing costsLogistics and warehousing expensesMarketing and distribution costsInternational shipping and customs dutiesLocal taxes and regulatory fees
Competitors	Analysis of direct and indirect competitorsUnderstanding of market positioning (premium vs. value)Assessment of competitive pricing strategiesEvaluation of market share and competitor strength
Customers	Target customer segments and their purchasing powerPrice sensitivity analysisValue perception in different marketsCustomer behavior and preferences
Cultural differences	Premium positioning in some markets vs. mainstream in othersLocal consumer behavior patternsCultural attitudes toward pricingBrand perception across different cultures
Channels of distribution	Number of intermediaries in the supply chainChannel partner margins and requirementsLocal distribution infrastructureMarket access costs
Currency rates	Exchange rate fluctuation impactsHedging strategiesPricing adjustment mechanismsCurrency conversion costs
Control by government	Local labor laws and minimum wage requirementsPrice control regulationsIndustry-specific regulationsTax implications and requirements

These seven components are interdependent — together, they create a dynamic framework for international pricing decisions. As there’s no universal perfect price point, a lot will depend on the specifics of your business and target market, but understanding and applying the 7Cs framework allows you to develop an adaptable pricing strategy for each market you expand to.

10 common international pricing strategies for businesses growing globally

Pricing for the international market is a multidimensional affair, with several factors shaping your transnational strategy, such as exchange rates and currency fluctuations, taxes, and regulatory compliance frameworks to which you have to adhere (more on this later).

Based on the context of your business, you’ll be able to choose from the following 10 common international pricing strategies.

1. Competition-based pricing

Competition-based pricing (sometimes also called market-based pricing) involves strategically positioning your prices relative to competitors and local markets. This isn’t just about being cheaper or more expensive — it’s about aligning your price with your market positioning.

This is the pricing strategy used by Venture Smarter, shares the company’s CEO and Editor-in-Chief, Jon Morgan.

“We decided to use a market-based pricing strategy. This approach allowed us to adjust our prices based on local market conditions and customer expectations. It required extensive market research and regular adjustments, but it helped us stay competitive and maximize revenue in each region.”

Ideal for:

• Mature markets with established competitors
• Products with clear market alternatives
• Markets where price is a key differentiator
• Industries with standardized products (retail, commodities)

2. Skimming pricing

Skimming means setting high initial prices that gradually decrease over time. This strategy capitalizes on early adopters’ willingness to pay premium prices for new technology or innovations.

Apple is a good example — the company consistently uses price skimming for iPhone launches. The iPhone 14 Pro Max launched at $1099 (128GB), but as newer models are released, the price gradually decreases, allowing Apple to capture different market segments over time.

Ideal for:

• High-tech products with rapid innovation cycles
• Luxury or premium brands
• Markets with strong early adopter segments
• Products with high initial development costs
• Regions with significant disposable income

3. Value-based pricing

Value-based pricing defines prices according to the perceived value of your product in customers’ eyes, rather than costs or market rates. This strategy enables premium pricing when you deliver unique, quantifiable benefits to customers. It’s a good option for businesses that want to differentiate themselves from competitors or that have a unique product or service offering. 

Vova Feldman, founder and CEO of Freemius, advises: “As a general pricing strategy, try to quantify how much money the product makes for the customer or how much time it saves them and convert that into money. If you’re charging $10 per month, it needs to either generate or save $100 — the common saying is you need to give customers 10x more value than your cost.”

Ideal for:

• Products with measurable ROI
• Innovative or unique solutions
• B2B software and services
• High-value consulting
• Markets where quality trumps price

4. Penetration pricing

This strategy involves entering the market with intentionally low prices to gain market share quickly, then potentially raising prices once established. It’s particularly effective for breaking into competitive markets.

Take Netflix. It used penetration pricing when expanding internationally, offering low-cost subscriptions to quickly build market share. In India, they introduced a mobile-only plan at ₹199 ($2.70) monthly to compete with local streaming services.

Ideal for:

• New market entrants
• Subscription-based services
• Emerging markets
• Products with network effects
• Markets with high price sensitivity

5. Tiered pricing

This strategy involves pricing different levels of your product or service — basic, standard, and premium plans — to attract diverse customer segments. This strategy can be beneficial for businesses because it creates clear upsell opportunities and captures different levels of willingness to pay.

Jovie Chen, CEO and CHRO of Zogiwel, explains how it worked in this company’s case:

“The decision to go with tiered pricing was heavily influenced by our customer research, which revealed varying spending capacities and preferences across different regions. It allows us to offer a product portfolio that aligns with both budget-conscious shoppers and those looking for a premium experience,” says Chen and shares a valuable lesson learned from this experience:

“Flexibility is key. Don’t hesitate to tweak the features or benefits within your tiers to align better with each region’s unique market dynamics. It’s more than just adjusting numbers; it’s about creating an offering that resonates with local consumers on a deep level, cultivating loyalty and confidence in your brand.”

Ideal for:

• Technology products
• Software services (Basic/Premium/Enterprise)
• Markets with diverse customer segments
• Products with clear feature differentiation
• Regions with varying purchasing power

6. Psychological pricing

This strategy leverages consumer psychology, using prices that appear lower than they are. It’s more sophisticated than simply ending prices in .99—it involves understanding local cultural price perceptions.

For instance, Zara uses psychological pricing globally but adapts it to local currencies and customs. In Europe, they might price at €39.95, while in Japan, they consider local preferences for prices ending in 0 or 8, for example ¥3,980 or ¥4,980.

Ideal for:

• Retail markets
• Consumer goods
• Price-sensitive markets
• Regions where specific numbers have cultural significance
• High-competition environments

Dealing with the cultural context can be a challenging task, according to Dawson Whitfield, CEO & Co-Founder of Looka.

“One challenge was addressing cultural differences in how customers evaluate software pricing. In some markets, subscription models are standard, while one-time purchases are preferred in others. We tackled this by offering flexibility—monthly and yearly plans with localized pricing where possible,” shares Whitfield.

7. Cost-plus pricing

This straightforward approach adds a standard markup to the cost of producing goods. While simple, it needs careful adjustment for different markets’ cost structures and competitive environments.

Take the famous IKEA as an example. The company uses a modified cost-plus strategy, maintaining similar profit margins across markets while adjusting for local costs and competition. They might have different markups in different countries based on operational costs.

Ideal for:

• Manufacturing industries
• Wholesale businesses
• Regulated markets
• Stable economies
• Markets with predictable costs

8. Optional pricing

This strategy involves offering a base product with additional optional features or services, allowing customers to customize their purchase while potentially increasing overall revenue.

For example, Microsoft’s Office 365 subscription offers various add-ons and premium features beyond the base package, adapted for different market needs and business sizes.

Ideal for:

• Software and technology products
• Service industries
• Markets with diverse customer needs
• Regions with varying willingness to pay
• B2B businesses

9. Premium pricing

Premium pricing positions products at the high end of the market, emphasizing quality, exclusivity, and prestige. This strategy requires careful market positioning and strong brand value.

Tesla initially entered many markets with their premium Model S before introducing more affordable models. This established their brand as a luxury electric vehicle manufacturer.

Ideal for:

• Luxury markets
• High-end fashion
• Premium technology products
• Affluent market segments
• Status-conscious cultures

10. Bundle pricing

Bundle pricing combines multiple products into a package offered at a price lower than the sum of individual items. This strategy can increase overall sales and market penetration.

Microsoft’s Xbox Game Pass bundles hundreds of games into a subscription service, with pricing adapted for different regions’ purchasing power.

Ideal for:

• Digital products and services
• Entertainment industry
• Markets with complementary products
• Regions with high price sensitivity
• Crowded markets that need differentiation

Each of these strategies can be highly effective when matched with the right market conditions and business objectives. The key to success is for you to understand your target market’s characteristics deeply, as well as the competitive landscape and cultural nuances before you choose and implement a pricing strategy.

Adapting pricing for different regions

Adapting your pricing for different regions is essential to remain competitive and maximize revenue. You can use several strategies to adapt your pricing, including price localization, price discrimination, and dynamic pricing.

Price localization

Price localization is the process of adapting prices to local market conditions. This approach takes into account factors such as currency exchange rates, taxes, and local pricing expectations.
For example, if you’re selling a product in Europe, you’ll need to consider the value-added tax (VAT) that’s added to the price. In the United States, sales tax can vary by state and even by city. Your prices need to reflect these factors, so that you can remain competitive in each region.

Price discrimination

Price discrimination is the practice of charging different prices for the same products or services based on the customer’s location, demographic, or other factors.

This approach can be an effective way to maximize revenue, but it requires a deep understanding of the customer base in each region — aspects like consumer preferences, economic health, and cultural contexts, which shape market demand.

For instance, some regions may exhibit higher price sensitivity, while others may be willing to pay more for top-notch quality.

Dynamic pricing

Dynamic pricing is a strategy that adjusts prices in real time based on market conditions, demand, and other factors.

This approach can help you optimize revenue by pricing products and services appropriately as market conditions change.

Tal Holtzer, CEO of VPSServer, shares that dynamic pricing protected the company’s revenue streams throughout currency changes. 

“Flexibility has been the main lesson. We study feedback and change pricing to fit local market conditions to be competitive and relevant globally.”

However, as Holtser notes, implementing dynamic pricing requires sophisticated analytics tools and a deep understanding of market trends. You’ll need to be able to collect and analyze data in real-time to make informed pricing decisions.

How to implement an international pricing strategy

Creating an international pricing strategy involves balancing profitability with market competitiveness across diverse regions. As we mentioned above, it requires understanding local nuances, addressing logistical and economic challenges, and adapting to cultural preferences.

Here are the key steps you’ll need to take to make sure you’ve chosen the right pricing strategy.

1. Conduct market research

Market research is the foundation of any pricing strategy. Understanding local markets involves analyzing consumer behavior, purchasing power, and cultural preferences. 

Identify elements that drive customer decisions in each region and how they perceive value, along with an assessment of existing demand for your product.

You’ll also need to study competitors’ pricing strategies to identify opportunities for differentiation and market positioning. This is where tools like surveys, focus groups, and competitive analysis software can come in handy.

Pro tip: Engage with local consultants or market research firms to gather insights about cultural and economic trends in your target region. Use AI-driven market analysis tools to speed up and refine the data collection process.

2. Analyze cost structures

Accurate cost analysis ensures that your pricing strategy is profitable. 

• Calculate all costs associated with producing, shipping, and marketing your product, as well as taxes, tariffs, and local distribution expenses. 
• Consider the impact of currency fluctuations, as exchange rate variability can significantly affect your costs and profit margins. 
• Create a detailed breakdown of fixed and variable costs for each market to get a clear picture of financial requirements.

Pro tip: Use enterprise resource planning (ERP) systems to automate cost tracking and ensure data accuracy. Simulate “what-if” scenarios to understand how different cost variables might impact pricing.

3. Define pricing objectives

Determine whether you aim to penetrate a new market, maximize short-term profits, or maintain competitiveness. Clearly defining your objectives will help you choose pricing strategies and ensure consistency across markets.

For example, penetration pricing may involve offering lower prices initially to capture market share, while skimming focuses on premium pricing for innovative products. 

Spotify has effectively used geographic price discrimination to expand its global presence while accommodating local market conditions. By adjusting subscription prices based on regional purchasing power, Spotify offers its Premium service at varying rates worldwide. For instance, in the United States, the monthly subscription is priced at $10.99, whereas in India, it is significantly lower at ₹119 (approximately $1.44). Similarly, in Brazil, the cost is R$19.90 (around $4.00). This strategic alignment of pricing with purchasing power highlights Spotify’s focus on market penetration and long-term subscriber growth while maintaining revenue sustainability.

Pro tip: Regularly revisit your pricing objectives to align them with changing market dynamics, such as new competitors or shifts in consumer preferences. Collaborate across teams—such as marketing, finance, and operations—to ensure cohesive goals.

4. Select an appropriate pricing strategy

Each strategy has its strengths, so consider market conditions, customer preferences, and your pricing objectives when making this decision. For example, value-based pricing works well for premium products, while the economy is suitable for standardized goods.

Toyota has successfully managed to grow in emerging markets while keeping its premium image in developed countries. In Southeast Asia, particularly Indonesia, Toyota implemented economy pricing by designing and producing vehicles like the Avanza specifically for local needs. By building these cars locally, Toyota reduced costs and offered them at affordable prices, capturing over 30% of the Indonesian market. Meanwhile, Toyota maintained its Lexus brand for premium pricing in developed markets, focusing on high-quality cars and excellent customer service. This dual approach highlights how Toyota balanced its business strategy to succeed in very different market conditions globally.

Pro tip: Test several strategies in smaller market segments before scaling. Use A/B testing to understand how customers respond to different pricing models.

5. Consider legal and regulatory factors

Research pricing-related regulations in each target market, including taxes, tariffs, import duties, and price controls. Partner with local legal or regulatory experts to ensure your pricing strategy adheres to all relevant laws. This way, you will avoid fines, delays, or disruptions to your business operations.

Pro tip: Create a compliance checklist for each market to streamline adherence to regulations. Use specialized legal software to track and update regulatory changes in real-time.

6. Implement pricing localization

Localization involves adapting your pricing strategy to suit local market conditions. Adjust prices to reflect economic factors, cultural perceptions of value, and customer expectations. 

This can be a challenging step, says Connor Butterworth, CEO & Owner of Southwestern Rugs Depot. “Global customers have the internet at their fingertips and can easily compare prices across regions. When they notice disparities, it could lead to negative perceptions or accusations of unfairness.”

Butterworth also shares a tip on how to overcome this issue: “A transparent communication strategy is crucial here. Clearly explain why prices differ, linking it to factors like tax rates or shipping costs. From my experiences, this transparency builds trust and can effectively manage expectations. Over time, you’ll find that honesty and clear communication can foster a better relationship with your international customer base, paving the way for smoother global expansion.”

Localization also involves considering currency exchange rates and rounding prices to make them appear more customer-friendly.

We can see an excellent example of pricing localization by the entertainment giant Netflix.

We already mentioned Netflix — it successfully expanded its presence in India by addressing the market’s high price sensitivity and strong competition that already had a big market share.In 2019, the company launched a mobile-only plan at ₹199 ($2.40) per month, targeting India’s vast mobile-first audience. To improve the user experience, Netflix introduced features like data-saving options and Smart Downloads tailored for mobile users. This approach led to significant growth, with the subscriber base rising from 4.2 million in 2019 to over 6.5 million by 2023.This strategy highlights the importance of tiered pricing and localized product innovations in capturing diverse markets. By gradually optimizing prices based on user behavior and focusing on affordability and accessibility, Netflix improved profitability, reporting a 24% revenue increase and a 75% net profit growth in India during FY23. The success demonstrates how adapting to local needs can drive global success.

Pro tip: Partner with local teams or representatives to validate pricing changes. Use AI tools to analyze regional purchasing trends and identify the most effective localization techniques.

7. Monitor and adjust

International pricing is not a set-it-and-forget-it process:

• Regularly monitor the effectiveness of your pricing strategy by tracking sales performance, customer feedback, and competitor actions. 
• Use tools like pricing analytics software to identify trends and make data-driven adjustments. 
• Stay responsive to market changes, such as economic shifts or new competitors, and ensure that your pricing remains competitive and profitable over time.

Pro tip: Set up automated alerts for key performance indicators (KPIs) like sales volume, profit margins, and customer acquisition rates. Schedule periodic reviews with cross-functional teams to evaluate and refine your strategy.

FAQs about international pricing strategies