Pricing is an important element of the marketing mix as the only component of the marketing mix that generates money. In this article we provide a brief introduction to the top ten pricing strategies
The diagram below lists top ten pricing strategies.
1. Marketing Penetration
The price is set low in order to increase sales and market share.
2. Marketing Skimming
The price is set high and is gradually lowered as the product moves through the product life cycle.
3. Psychological Pricing
The price is set just below a whole number in order to make the product and price more attractive. E.g. setting price at 99p rather then £1.
4. Premium Pricing
The firm will set a high price. The price set will reflect the premium quality of the product.
5. Bundle Pricing
Products are bundled together and a slightly cheaper price is charged for buying the bundled item.
6. Value Pricing
Prices are set on products that reflect the value of the product. If the product has an economy feel then the price will reflect this fact. Many supermarkets have introduced value or economy products that reflect this.
7. Captive Pricing
With some products, you have to buy another item in order to use it. If we look at printers, you need to buy the ink in order to run that printer. Captive pricing is a clever strategy, usually the additional items that are needed will cost more.
8. Cost Plus Pricing
The organisation puts a percentage profit on the cost of making the product. For example if the production cost is £200 and the mark up is 20%, the selling price will be £240.
9. Optional Pricing
A firm will charge extra for any optional products that are sold along side the main product.
10. Competitive Pricing
A firm looks at their competitors and decides to charge a premium price , an economy price or a mid range price for their products, compared to their competitors.
We hope you've enjoyed this overview of the top ten pricing strategies strategies. If you would like more information about pricing strategies visit our full article about pricing strategies
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