You're launching in a new geographic market, targeting a new vertical, or introducing a product category that doesn't exist yet. Your existing pricing doesn't apply. Competitive intelligence is limited or nonexistent.
How do you price when you have no data?
Most companies either copy their existing pricing (ignoring market differences) or guess conservatively (leaving money on the table). Both approaches fail because new markets require different pricing logic than established ones.
Here's how to set pricing for new market entry when you don't have the luxury of perfect information.
The Three New Market Scenarios
New market pricing depends on which type of new market you're entering:
Scenario 1: Geographic expansion
You have a product that works in Market A. You're entering Market B with different currencies, purchasing power, competitive dynamics, and buying behaviors.
Example: US SaaS company entering Europe, Latin America, or Asia-Pacific.
Scenario 2: Vertical expansion
You've succeeded in Industry A. You're adapting your product for Industry B with different buyer personas, use cases, budgets, and value perception.
Example: Marketing automation company moving from B2B SaaS to healthcare.
Scenario 3: Category creation
You're introducing a new product category that doesn't exist yet. No direct competitors, no established pricing norms, limited buyer education.
Example: First workflow automation tool in a manual industry.
Each scenario needs different pricing approaches.
Geographic Expansion Pricing: Don't Just Convert Currency
The laziest pricing strategy: take your US pricing, convert to local currency, round to a nice number. This fails because it ignores purchasing power and local competitive dynamics.
Purchasing power parity (PPP) adjustment
A $99/month product in the US doesn't have the same relative cost everywhere:
- In markets with lower PPP (India, Brazil, Eastern Europe), $99/month is luxury pricing
- In markets with higher PPP (Switzerland, Norway, Australia), $99/month is mid-market
PPP-adjusted pricing framework:
- Calculate PPP ratio: Compare purchasing power in new market vs. your home market
- Apply adjustment factor: Multiply your home market price by PPP ratio
- Validate against local competition: Check if adjusted price aligns with local market rates
Example:
US pricing: $99/month Entering Brazil (PPP ratio ~0.5) PPP-adjusted price: $50/month Local competitive check: Competitors price $40-60/month Final pricing: $49/month
When to ignore PPP:
- Enterprise customers: Large multinationals have global budgets; price consistently
- Premium positioning: If you're the high-end option globally, maintain premium pricing everywhere
- High-value niche: Small markets where customers will pay for specialized solutions
Vertical Expansion Pricing: What They Currently Spend Matters
Different industries have wildly different budget norms for the same capabilities.
Research current spending in target vertical:
Before setting prices, answer:
- What do they currently spend on solving this problem? (Your price should be a fraction of status quo cost)
- What's their budget authority threshold? (Price below approval limits for faster sales)
- What do adjacent tools in this vertical cost? (Your pricing should feel consistent with their other software)
Example: Moving from tech startups to healthcare
Tech startup pricing: $999/month (fast decision, high willingness to pay for efficiency) Healthcare pricing: $499/month (longer procurement, tighter budgets, more approvals needed)
Same product, different pricing because:
- Healthcare has longer sales cycles (lower price reduces friction)
- Healthcare budget cycles are more rigid (hitting budget thresholds matters)
- Healthcare compliance costs are high (they're spending elsewhere in the stack)
Value metric adjustment for verticals:
What drives value in one vertical might not in another:
- Per-user pricing works in tech (scales with team growth)
- Per-location pricing works in retail (aligns with their business model)
- Per-patient pricing works in healthcare (matches their revenue model)
Match your pricing metric to how the vertical thinks about costs and scale.
Category Creation Pricing: Anchoring Without Competition
When you're creating a new category, you have no competitive pricing to reference. This is simultaneously freedom (you set the market) and risk (you might be wildly wrong).
Three anchoring strategies:
Strategy 1: Price against displaced solutions
What are customers doing today to solve this problem? Price relative to that cost.
Example: You're selling automated contract analysis.
- Current solution: Lawyers billing $300/hour, spending 5 hours per contract
- Your pricing: $200 per contract analyzed
- Customer saves $1,300 per contract vs. manual process
Strategy 2: Price against adjacent categories
Find established product categories that serve similar buyers with similar budgets. Price consistently.
Example: You're selling AI-powered sales coaching (new category).
- Adjacent category: Sales training platforms ($100-200 per user/month)
- Your pricing: $149 per user/month
- Fits within established budget expectations for sales tools
Strategy 3: Value-based pricing from day one
Calculate specific value delivered. Price as percentage of value.
Example: Your product reduces customer churn by 15%.
- Customer with $10M revenue, 20% churn, 15% reduction saves $300K annually
- Your pricing: $50K/year (17% of value delivered)
- Defensible ROI even without competitive comparison
The risk of pricing too low in category creation:
If you price like a cheap alternative, you signal you're not the category leader. In new categories, premium pricing can actually help establish credibility.
Price at the high end of what early adopters will pay. You can always reduce pricing later; increasing it is much harder.
Testing Pricing in New Markets
Don't commit to pricing company-wide before validating it with real customers.
Market entry pricing test framework:
Phase 1: Beta pricing (months 1-3)
- Offer discounted pricing to first 10-20 customers
- Clearly communicate this is beta pricing (will increase)
- Set expectation: "Beta pricing is $X, standard pricing will be $Y in 90 days"
- Goal: Prove product-market fit, not optimize pricing
Phase 2: Early adopter pricing (months 4-9)
- Increase to ~70% of target pricing
- Still positioned as early adopter benefit
- Grandfather beta customers or give them notice of increase
- Goal: Validate customers will pay real money
Phase 3: Standard pricing (month 10+)
- Move to full target pricing
- Remove "early adopter" discounting
- Grandfather previous customers at old pricing
- Goal: Optimize for long-term sustainable pricing
What to learn in each phase:
- Beta: Does anyone pay anything? (Product-market fit)
- Early adopter: What's the price ceiling? (Willingness to pay)
- Standard: What's sustainable win rate? (Optimal pricing)
Pricing Localization: Beyond Currency
New market pricing isn't just about what you charge. It's how you present it.
Payment preferences by region:
- US/Canada: Monthly subscription via credit card is standard
- Europe: Annual invoicing with bank transfer more common
- Asia-Pacific: Mix of payment methods, often prefer annual payment
- Latin America: Local payment methods crucial (boleto in Brazil, etc.)
Contract term expectations:
- US: Monthly and annual options both normal
- Enterprise Europe: Multi-year contracts more standard
- Asia: Longer commitment periods expected in enterprise
Discounting culture:
- US: Discounting happens but not expected on smaller deals
- Middle East/Asia: Negotiation and discounting heavily expected
- Nordics: List pricing more respected, less negotiation
Price the same product differently in presentation, payment terms, and flexibility based on local market norms.
Pricing Governance for New Markets
Set guardrails before entering new markets to prevent race-to-the-bottom pricing.
Establish clear boundaries:
- Minimum price floor: Lowest price sales can offer (protects margins)
- Maximum discount: Deepest discount allowed for market entry (prevents over-discounting)
- Approval thresholds: When deals need pricing committee review
Example governance for new market:
- Standard price: $500/month
- Floor price: $350/month (30% discount maximum)
- Discount authority: Sales can offer up to 20% ($400/month), pricing approval needed for 20-30%
- Review after 50 deals: Assess if pricing is working or needs adjustment
This prevents individual reps from setting unintentional pricing precedents while allowing flexibility for market learning.
When to Adjust Pricing in New Markets
You won't get pricing right on day one. Plan for iteration.
Signals that pricing is too high:
- Win rate below 15% on qualified opportunities
- Price is top objection in >50% of lost deals
- Sales cycle is 2x longer than established markets
- Heavy discounting required to close any deals
Signals that pricing is too low:
- Win rate above 60% (too easy—you're underpriced)
- Customers accept pricing without any negotiation
- No price objections even from smaller prospects
- Competitive alternatives are priced 50%+ higher
How to adjust:
- Test new pricing with new customers only (don't change existing)
- A/B test different price points across similar customer segments
- Communicate changes clearly ("We're adjusting pricing based on market feedback")
Treat first-year pricing as experimental. Optimize based on data, not assumptions.
The Real Goal
New market pricing is about learning fast, not getting it perfect immediately.
Enter with educated hypotheses. Test with real customers. Adjust based on what you learn.
The companies that succeed in new markets aren't the ones with perfect Day 1 pricing. They're the ones who learn faster and adjust smarter than competition.
Price to learn, then price to win.