17-pricing-strategy-global

# 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.

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## 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

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## 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 |
|