Price strategies

Cards (11)

  • Cost-based pricing
    • Different prices are charged for the same product depending on the time, age and etc.
  • Penetration pricing
    • Low price at start to access gain to the market
    • Often used when there are closed competitors
    • Price is raised over time
  • Promotional pricing
    • Vouchers/offers/discounts are offered to encourage customers
    • Prices are reduced for a short period of time
    • Used to quickly sell inventory and aid cash flows
  • Skimming pricing
    • Setting a high initial price for the product when it is new
    • Ideal to use when there is little to no competition
    • Prices gradually lowers overtime
    • High profit margins during the introduction stage to help recover costs
  • Destroyer pricing
    • Prices are kept very low to destroy competition
    • Illegal in the UK
  • High/premium pricing
    • Using a price to deliberately to signal that the products are luxurious, good quality/exclusive image
    • Sales will be lower but there will be high profit margins on each sale
  • Low/valuing pricing
    • Long term pricing strategy setting the price below the competiton
    • Customers will often look for a cheaper alternative of a way of saving money
  • Psychological pricing
    • A price which makes the customer thinks that is a lot cheaper for example 99p instead of £1
  • Loss Leaders
    • Price of one item is set much lower than that of competitors
    • Often a pricing tactic used by supermarkets
    • A loss is made on this product but it brings customers to the shop to buy the products where they are enticed to buy other full price items
  • Dynamic pricing
    • Prices will vary, low when demand is low and high when demand is high
    • Cheap flights at different times of the year
  • Market/Competitive
    • Long term price strategy selling the price similar to other competitors
    • Requires ongoing promotion/advertising