Pricing Strategy ...

1516 WordsMar 8, 20097 Pages
There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Contents 1 Competition-based pricing 2 Cost-plus pricing 3 Creaming or skimming 4 Limit pricing 5 Loss leader 6 Market-oriented pricing 7 Penetration pricing 8 Price discrimination 9 Premium pricing 10 Predatory pricing 11 Contribution margin-based pricing 12 Psychological pricing 13 Dynamic pricing 14 Price leadership 15 Target pricing 16 Absorption pricing 17 Marginal-cost pricing 18 References [edit] Competition-based pricing Setting the price based upon prices of the similar competitor products. Competitive pricing is based on three types of…show more content…
The idea of selling at a loss may appear to be in the public interest and therefore not often challenged. Only when the leader pushes up prices, it then becomes suspicious. Loss leadership can be similar to predatory pricing or cross subsidisation; both seen as anticompetitive practices. [edit] Market-oriented pricing Setting a price based upon analysis and research compiled from the targeted market. Also with the cost price. [edit] Penetration pricing Main article: penetration pricing The price is deliberately set at low level to gain customer 's interest and establishing a foot-hold in the market.[2] [edit] Price discrimination Main article: price discrimination Setting a different price for the same product in different segments to the market. For example, this can be for different ages or for different opening times, such as cinema tickets. Market orientated pricing is also a very simple form of pricing used by very new businesses. What it involves is, setting the price of your product/service according to research conducted on your target market. [edit] Premium pricing Main article: Premium pricing Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. The practice is intended to exploit the (not necessarily justifiable) tendency for buyers to assume that expensive items enjoy

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