pricing strategies

• what three things do pricing strategies depend on?

  1.competitors

  2.the aims

  3.the product/service
• what are the 6 types of pricing strategies?

  1.cost plus

  2.price skimming

  3.competitive

  4.penetration

  5.predatory

  6.psychological
• what is cost plus pricing?

  a price that covers the cost and makes a profit
• what is price skimming?


  the price is set high to create high profit and overtime it lowers
• what is competitive pricing?


  price is in line with competitors. it is used when the products are similar
• what is penetration pricing?

  setting the price low to encourage sales and then gradually raising it
• what is predatory pricing?

  existing businesses lower their prices so new businesses cant make profit.
• what is psychological pricing?

  when the price appears cheaper than it is (0.99p)
• what are 6 factors that determine a pricing strategy?

  1.amount of differentiation

  2.price elasticity of demand

  3.level of competition

  4.strength of a brand

  5.stage in the product life

  6. cost and the need to make a profit
• what is the amount of differentiation?

  if it is highly differentiated they can charge a premium price
• why does the price elasticity of demand affect pricing strategy?

  products with lots of substitutes will have to price close to competitors
• why does the level of competiton affect pricing?

  the change of price in one business may result in all the other businesses changing it
• why does the strength of a brand affect the pricing strategy?

  a strong brand will charge higher prices as consumers want strong brands
• why does the stage in the products life affect pricing?

  products in the launch stage may use skimming
• why does the need to make a profit affect pricing?


  the cost of a product needs to be taken into account when the price is decided.