The Best Real-World Examples of 3 Examples of Penetration Pricing Strategy

3 flagship examples of penetration pricing strategy everyone should know

When people talk about examples of 3 examples of penetration pricing strategy, three playbooks show up again and again: tech platforms, consumer staples, and telecom. These are the textbook cases professors love because the data is public and the patterns are obvious.

1. Netflix and the streaming wars: low prices to lock in habits

Netflix is one of the best examples of penetration pricing strategy in modern business. When it pivoted from DVDs to streaming, its monthly price undercut traditional cable by a wide margin. Instead of charging cable-like rates, Netflix priced its service low enough that it felt like a no-brainer add-on rather than a big decision.

Then, as competitors like Disney+, Hulu, and Max piled in, Netflix used ad-supported tiers and regional pricing to stay attractive in new markets. In many countries, Netflix’s early streaming price was significantly lower than pay-TV bundles, which helped speed up cord-cutting and normalize subscription streaming.

The pattern is classic penetration pricing:

• Start with a relatively low subscription price versus the incumbent option (cable or satellite).
• Invest heavily in content and user experience to keep churn low.
• Gradually raise prices once customers are hooked and alternatives feel less convenient.

You can see this strategy in Netflix’s price history and subscriber growth, which has been analyzed in business school case studies and media research. The company’s move into ad-supported tiers in 2022–2023 is another example of a lower entry price used to widen the funnel in a crowded market.

2. Uber and ride-hailing: cheap rides, expensive market share

If you want an example of aggressive penetration pricing, Uber’s early years are hard to beat. In many cities, UberX rides were dramatically cheaper than traditional taxis. The company subsidized fares and driver incentives to make the service both cheaper and more available than the incumbent.

Uber’s penetration pricing strategy looked something like this:

• Launch with promotional codes and deeply discounted rides.
• Flood the market with drivers by offering bonuses and guarantees.
• Normalize the idea that a private ride can be nearly as cheap as public transit for short trips.

As the market matured, prices rose. Surge pricing, fewer subsidies, and higher base fares turned what had been a bargain into something closer to a premium service in many cities. But by that point, the habit was formed. For a large share of urban riders, “call an Uber” had become the default behavior.

This is one of the clearest real examples of penetration pricing strategy: sacrifice margin in the short term to make the old option (taxis) look overpriced and inconvenient, then adjust pricing once you’ve changed consumer expectations.

3. Telecom and internet providers: intro deals that quietly expire

Telecom companies might be the most familiar examples of 3 examples of penetration pricing strategy for everyday consumers. Internet and cable providers have been running the same play for years:

• Advertise a “new customer” rate that’s dramatically lower than the standard price.
• Lock customers into a 12–24 month contract at that introductory rate.
• Raise prices once the contract or promo period ends, often with automatic renewals.

These intro offers are a textbook penetration pricing move. The company uses a low entry price to overcome switching costs—installation, equipment, the hassle of canceling the old service—and then recoups profits later.

Regulators and consumer advocates have started paying more attention to how these deals are marketed. The U.S. Federal Communications Commission (FCC) has pushed providers to be more transparent about the “all-in” cost of broadband, including after promo periods end. You can see more on that in FCC consumer resources at fcc.gov.

Still, as of 2024, this remains one of the best examples of penetration pricing strategy in a mature, highly regulated industry.

More real examples of penetration pricing strategy in 2024–2025

Those three are the classics. But if you’re looking for real examples you can learn from today, you need to look at subscription apps, hardware, and even electric vehicles.

Streaming bundles and ad tiers: Disney+, Spotify, and friends

As the streaming market has become crowded, newer services have leaned on penetration pricing to get a foothold.

Disney+ launched in 2019 at a lower price point than Netflix in the U.S., despite having a huge library of premium content. That low entry price, combined with aggressive annual plan discounts, helped Disney+ reach over 100 million subscribers in just a couple of years. Only after building that base did Disney start raising prices and introducing ad-supported tiers.

Spotify has used student discounts, family plans, and regional pricing as penetration tools. In emerging markets, Spotify’s subscription price is often set far below U.S. levels to match local incomes and compete with piracy or local services. These “penetration” prices help Spotify win market share before local rivals can scale.

In both cases, examples include:

• Temporarily lower prices at launch.
• Discounted bundles (e.g., Disney+ with Hulu and ESPN+).
• Ad-supported plans that offer a cheaper on-ramp.

These are modern, nuanced examples of 3 examples of penetration pricing strategy applied to digital content.

Food delivery apps: DoorDash, Uber Eats, and Grubhub

Food delivery apps in the U.S. are a masterclass in penetration pricing:

• Free delivery for the first few orders.
• Steep discounts for new users (50% off your first three orders, for example).
• Subscription passes like DashPass or Uber One priced low at launch to build a base of frequent users.

During the COVID-19 pandemic, these platforms leaned even harder into low intro pricing and promotions to capture restaurant and consumer demand. As in other penetration pricing examples, once people built the habit of ordering in, the platforms were able to gradually reduce promotions and raise delivery fees or service charges.

By 2024, many consumers complain that delivery has become expensive, but the behavior has stuck. That arc—from cheap, heavily subsidized orders to higher, more sustainable pricing—is exactly what you’d expect from a penetration strategy.

Smartphone and hardware launches: Xiaomi, OnePlus, and Amazon devices

In hardware, some of the best examples of penetration pricing strategy come from Chinese smartphone brands and low-cost device ecosystems.

Xiaomi built its early reputation on phones that offered premium specs at mid-range prices. The idea was simple: undercut Samsung and Apple on price while offering similar or better hardware. That aggressive pricing helped Xiaomi grab market share in India, Southeast Asia, and parts of Europe.

OnePlus followed a similar path in its early days—flagship-level Android phones at significantly lower prices than Samsung’s Galaxy line. Over time, as brand recognition grew, both companies introduced higher-priced models and nudged average selling prices upward.

Amazon takes a slightly different but related approach with its Kindle and Fire devices. The hardware is often sold at or near cost, especially during events like Prime Day, because Amazon expects to make its money back on content, subscriptions, and ecommerce. This “razor-and-blades” style pricing is a variant of penetration pricing: low upfront cost to get you into the ecosystem, then monetization over time.

For a more general discussion of pricing strategies in tech and consumer products, you can find useful overviews in business and economics courses from universities like MIT OpenCourseWare and Harvard Business School Online, which often use these companies as case examples.

Electric vehicles: Tesla’s price cuts and new entrants

EV makers have also started using penetration pricing more aggressively. In 2023–2024, Tesla cut prices on several models in the U.S., Europe, and China. While not always framed as penetration pricing, the logic is similar:

• Lower prices to expand the addressable market.
• Pressure competitors who have higher cost structures.
• Increase the installed base of vehicles to support software, services, and brand dominance.

Newer EV brands, particularly in China, have gone even further, launching with aggressive pricing to win early adopters and fleet contracts. These real examples of penetration pricing strategy show how the playbook can be used even in capital-intensive industries where unit economics are tight.

SaaS and B2B software: freemium and low intro pricing

Software-as-a-service is full of subtle penetration pricing plays, even when the list price looks high.

Freemium models—like those used by Slack, Zoom, and many productivity tools—are essentially penetration pricing in disguise. The free tier is the “penetration” price: it lowers the barrier to adoption, encourages teams to try the product, and only later does the company push for paid upgrades.

Other SaaS companies use:

• Introductory discounts for the first year.
• Lower prices for startups or small teams.
• Region-based pricing to penetrate emerging markets.

These examples include a twist: the “price” is not only dollars but also time and organizational friction. A low financial price, combined with easy onboarding, acts as a penetration tool to get the software embedded into workflows.

If you’re interested in how pricing affects adoption and behavior, behavioral economists and marketing researchers have written extensively on this. The National Bureau of Economic Research and university marketing departments (for example, at Harvard.edu) often publish working papers and case studies that dissect these strategies.

How to recognize penetration pricing in the wild

Once you’ve seen enough real examples of penetration pricing strategy, patterns jump out quickly. Here are some signs you’re looking at penetration pricing rather than just a random discount:

• The product is new to the market or entering a new region.
• The launch price is noticeably lower than comparable alternatives.
• There’s a clear plan (or history) of raising prices later.
• The company is backed by investors or a parent company willing to absorb short-term losses.

In other words, not every sale or coupon counts. True penetration pricing is a strategic move to gain market share, not just a short-term revenue stunt.

When penetration pricing backfires

To be fair, not all examples of 3 examples of penetration pricing strategy end well.

If a company sets prices too low for too long, customers may anchor on that cheap price and rebel when it goes up. We’ve seen this with streaming services facing backlash on social media after multiple price hikes. In some markets, consumers churn aggressively once promo periods end, forcing companies into a cycle of constant discounting.

There’s also the regulatory angle. In some jurisdictions, pricing below cost for an extended period can raise antitrust questions, especially if it looks like an attempt to drive competitors out of business. Competition authorities in the U.S. and EU monitor this behavior; you can find guidance on pricing and competition policy through resources like the U.S. Federal Trade Commission at ftc.gov.

That said, the best examples of penetration pricing strategy—Netflix, Uber, major telecoms, and the newer EV and streaming players—show that when managed carefully, it can be a powerful way to enter and reshape markets.

FAQs about penetration pricing (with real examples)

Q1. What are some of the best examples of penetration pricing strategy today?
Some of the best examples include Netflix’s early streaming prices, Uber’s discounted rides in its growth phase, telecom intro deals for internet and cable, Disney+ launch pricing, Xiaomi and OnePlus smartphones undercutting rivals, food delivery apps with free delivery and heavy promos, and SaaS freemium models like Slack and Zoom.

Q2. Can you give an example of penetration pricing in subscription services?
Disney+ is a clean example of penetration pricing in subscriptions. It launched at a lower monthly price than many competitors, used annual discounts and bundles, and only later increased prices once it had tens of millions of subscribers and a strong content library.

Q3. How is penetration pricing different from a simple discount?
A basic discount is usually a short-term tactic to boost sales. Penetration pricing is a broader strategy: the company intentionally sets a low initial price to enter a market, build share, and then adjusts pricing over time. The real examples of penetration pricing strategy we’ve covered all show a launch phase with low prices followed by gradual increases.

Q4. Are there examples of penetration pricing in B2B markets, not just consumer apps?
Yes. Many B2B SaaS platforms offer low introductory pricing, freemium tiers, or heavy first-year discounts to get into organizations. Once the software is embedded in workflows, prices for renewals, advanced features, or additional seats often rise.

Q5. What should a business watch out for when using penetration pricing?
Based on the real examples of 3 examples of penetration pricing strategy we’ve walked through, the main risks are: training customers to expect low prices, struggling to raise prices later without backlash, and underestimating how long it takes to reach scale. Companies need a clear path from low intro prices to sustainable margins, plus a plan for communicating price changes to customers.

Penetration pricing isn’t magic. But if you study these examples of 3 examples of penetration pricing strategy—across streaming, ride-hailing, telecom, hardware, EVs, and SaaS—you’ll see a common thread: smart companies use low prices as a temporary weapon, not a permanent identity.