Price is the value for a product or a service. Pricing depends on various factors like segment, ability to pay, market conditions, competitor actions, input costs, etc. Basic pricing strategies are –
Premium Pricing
Unique products are sold with higher price than usual. Product packaging, store decor support premium pricing.
Example: Apple iPhone, Porsche Cars, etc. have an edge over other products due to its premium quality.
Penetration Pricing
Prices are set lower initially when the product is launched. This is due to promotional activities and discounts, cashbacks, etc. is offered for certain period.
Example: Mobile phones rates in India.
Economy Pricing
This strategy is for the masses where market share is high and so the rates have to be the lowest in this segment.
Example: FMCG products like toothpaste, Maggi, Coke, etc.
Price Skimming
This strategy is for the products which has no competition and so companies dominate the market and charge higher price from customers,
Example: Apple iPad was priced exorbitantly high when it was launched as it has no competitors. Over the years due to other players, iPads have got cheaper.
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