Pricing Techniques

• A pricing strategy considers segments, ability to pay, market conditions, competitor actions, trade margins, and input costs.
• Cost-based pricing: setting prices based on the cost of the goods or services being sold
• Mark-up Pricing: calculated as a percentage from cost per unit
• Customer/target-based pricing: companies set certain targets to achieve based on what customers are prepared to pay
• Competition-based Pricing: setting prices in relation to the prices of competitors
• Promotional Pricing: sales strategy in which businesses temporarily reduce the price of a product or service to attract more customers.

  e.g: Buy one get one Free
• Penetration Pricing: Products are sold at very low market prices to attract consumers to products that are being introduced into the market. Not a long-term market strategy
• Psychological Pricing: uses customers' emotional response to encourage sales. Customers will read the slightly lower price and consider it to be lower than the price is.
• Bait Pricing: prices are set lower than item's cost price in order to attract customers into a shop to buy the product or other items.
• Skimming Prices: prices attached to a new innovative product that is considered unique and prestigious. Charging higher prices when product is introduced in order to test the demand.