Exploring pricing strategies and their impact on financial performance of SMEs in Nigeria

Obiajulu, Chinonso Benjamin and Azubuko, Chidimma Francisca and Okpanachi, Joshua (2025) Exploring pricing strategies and their impact on financial performance of SMEs in Nigeria. World Journal of Advanced Research and Reviews, 27 (2). pp. 1281-1287. ISSN 2581-9615

This study explores the impact of pricing strategies on the financial performance of Small and Medium-sized Enterprises (SMEs) in Nigeria, aiming to identify effective approaches for enhancing profitability and competitiveness. Conducted in Lagos, the research employed a mixed-methods design, collecting data from 175 SMEs across manufacturing, retail, services, technology, and healthcare sectors through structured questionnaires and interviews with 15 SME owners. The scope included examining cost-based, value-based, and dynamic pricing strategies, alongside the frequency of pricing reviews. Results indicate that cost-based pricing was most common (22.9%), but value-based pricing yielded the highest financial performance rating (4.2 on a 5-point scale), followed by dynamic pricing (4.0), compared to cost-based (3.8). Regression analysis confirmed significant correlations between value-based (p<0.01) and dynamic pricing (p<0.05) with profitability. Quarterly and monthly pricing reviews (31.4% and 20.0% of SMEs) were linked to higher performance than annual reviews. Interviews highlighted that value-based pricing enhances customer loyalty, while dynamic pricing enables adaptability to Nigeria’s volatile market. The study concludes that value-based and dynamic pricing, supported by frequent reviews, significantly improve SME profitability and resilience. These findings offer practical guidance for SME owners to adopt customer-centric and adaptive pricing strategies and underscore the need for training programs to support implementation, contributing to SME sustainability in Nigeria’s challenging economic landscape.