It is innovative (e.g. unique, creative, original).
It is made to a good standard (high quality).
It is functional (it does what it is supposed to do).
It meets the needs of the customer.
Skimming
Price skimming is where the price of a product starts high because the product is new / unique and demand is likely to be high
advantages of Skimming
Allows a business to maximise sales revenue whilst the product is in high demand
Cost-plus
Cost-plus is when a business looks at how much it cost them to make / buy the product from a supplier, and then adds on a percentage in order to ensure they make a profit
advantages of Cost-plus
It’s a good way to ensure that products sold actually make a profit
Penetration
Penetration pricing is when a business tries to enter a competitive market by starting off with a low price
advantages of Penetration
New customers might be attracted to try the new product, and then continue buying it if they like it
Competitor
This is where a business keeps a close eye on competitors’ prices and tries to match or beat them.
advantages of Competitor
Customers like to shop around for the best price, so this can help to attract customers away from competitors.
Promotional
Promotional pricing is the short term use of price reductions and special offers to increase sales.
