Tuesday, 24 May 2016

Pricing Strategies

Competitive pricing- when companies monitor their competitors prices to make sure their prices are the same or at a lower rate

Premium pricing- keeping the price of a product or service high to encourage favourable perceptions of the product, based solely on price

Skimming pricing- charging a high price for a product for a limited period when it is new to the market while it remains unique to the market

Loss leader- products sold at or below cost price. They will lose money but will make profit indirectly.

Penetration pricing- the opposite of skimming. Charging a low price for a product to attract customers and gain market share

Psychological pricing- companies base the price on customers expectations about what to pay. e.g. £9.99

Mark up/cost plus pricing- adding direct and indirect costs of production together and then adding a fixed percentage called a mark up

Discrimination pricing- charging different prices for different customers e.g. train tickets- on and off peak

Promotional pricing- reducing pricing to unsustainably low levels to increase interest in the product.

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