Pricing Strategies
Different pricing strategies that a company can adopt to decide the price of its product/service include:
The time business faces the most difficulty in setting up the pricing strategy is when they launch a new product/service. The introductory stage is tough for almost all businesses. In this scenario, businesses mostly go for either Market-Skimming Pricing or Market-Penetration Pricing. Market-Skimming Pricing is opted by those companies who have launched new products and have no competition. They charge high prices at first and later on lowers them. Market-Penetration Pricing is the opposite of market-skimming pricing. In Market-Penetration Pricing, business sets low prices at first to gain a significant market share and later on increase their prices.
When a product is a part of the product mix, the business would like to charge higher prices for the product in order to increase the overall profits of the product mix. There are various strategies coming under Product Mix Pricing Strategy, stated as:
|
Strategy |
Description |
|---|---|
| Product Line Pricing | Setting prices across an entire product line |
| Optional-product Pricing | Pricing accessary or optional products sold with the main product |
| Captive-product Pricing | Pricing products that are complementary to the main product |
| By-Product Pricing | Pricing low-value by-products to get rid of them |
| Product Bundle Pricing | Pricing bundles of products sold together |
Companies keep on changing their pricing strategy to account for various customer differences and changing situations. There are various strategies coming under Price-Adjustment Strategies, such as:
|
Strategy |
Description |
|---|---|
| Discount and Allowance Pricing | Reducing prices to give rewards to customers for exceptional responses like paying early or promoting the product |
| Segmented Pricing | Adjusting prices to allow for differences in customers, products, or location |
| Psychological Pricing | Adjusting prices for psychological effect |
| Promotional Pricing | Temporarily reducing prices to increase short-run sales |
| Geographic Pricing | Adjusting prices to account for customers’ geographic location |
| Dynamic Pricing | Adjusting prices continually to meet the needs of individual customers and situations |
| International Pricing | Adjusting prices for international markets |