Pricing Tactics

Pricing tactics

These are the specific actions or methods used to implement the pricing strategy, often in response to short-term market conditions or competitive pressures.

Complementary pricing

It is an umbrella category of "captive-market" pricing tactics. It refers to a method in which one of two or more complementary products is priced to maximize sales volume.

Contingency Pricing

Is the process where a fee is only charged contingent on certain results. It is widely used in professional services, such as legal services and consultancy services.

Contingency Pricing

In this pricing tactic, if the desired result doesn't happen, the client doesn’t pay (or pays much less)

Differential Pricing

Also known as flexible pricing, multiple pricing, or price discrimination, this occurs when different prices are charged to different customers or market segments, and may depend on the service provider's assessment of the customer's willingness or ability to pay.

Differential Pricing

In the airline industry, prices vary by booking time, seat class, or destination. This is an example of what pricing tactic?

Discrete Pricing

Is a pricing strategy where the price of a product or service is intentionally set to stay within the approval authority of a specific decision-maker — usually in a business-to-business (B2B) setting.

Discrete Pricing

Netflix, Disney+, and Spotify provide tiered subscription plans (e.g., Basic, Standard, Premium) at fixed price points. They use what kind of pricing tactic?

Discount Pricing

Occurs when a marketer or retailer offers a reduced price. It comes in various forms, including quantity rebates, loyalty rebates, seasonal discounts, and periodic or random discounts.

Diversionary Pricing

Is a variation of loss leading used extensively in services; a low price is charged on an essential service to recoup on the extras; can also refer to low prices on some parts of the service to develop an image of low price.

Everyday Low Prices

Refers to the practice of maintaining a regular low price, in which consumers are not forced to wait for discounts or specials. This method is used by supermarkets

Exit fees

Refer to a fee charged for customers who depart from the service process before natural completion

Exit fee

This pricing tactic provides a charge that a customer has to pay if they decide to leave or cancel a service before they’ve finished their contract or the service has naturally ended.

Exit fee

Imagine you sign up for a gym membership that lasts 12 months, but after 6 months, you decide to quit. The gym might charge you for canceling early. This is an example of what pricing tactic?

Experience Curve Pricing

Occurs when a manufacturer prices a product or service at a low rate to obtain volume and with the expectation that the cost of production will decrease with the acquisition of manufacturing experience

Experience Curve Pricing

The concept of this pricing tactic is based on the idea that the more a company produces something, the more efficient it becomes at making it — leading to lower production costs over time

Experience Curve Pricing

A smartphone company releases a new budget model at a very low price. Initially, they earn very little profit. But as they produce more, their workers become faster, suppliers give discounts for bulk orders, and production methods improve — lowering costs. Eventually, they make a healthy profit even at the same low price. Which pricing tactic best describes this example?

Geographic pricing

Occurs when different prices are charged in different geographic markets for an identical product.

Shipping costs, local competition, taxes/tariffs

What factors influence geographic pricing?

Guaranteed Pricing

Is a variant of contingency pricing. It refers to the practice of including an undertaking or promise that specific results or outcomes will be achieved.

Guaranteed pricing

A digital marketing firm says: "We guarantee a 20% increase in leads, or your money back." What pricing tactic is this?

High-Low Pricing

Refers to the practice of offering goods at a high price for some time, followed by offering the same goods at a low price for a predetermined time. This practice is widely employed by chain stores selling home goods.

High-Low Pricing

New clothing collections launch at high prices but go on sale at the end of the season. Customers take advantage of this by waiting it out on the sale. This is an example of what pricing tactic?

Honeymoon pricing

Is a pricing strategy where a business offers a low introductory price to attract new customers, and then raises the price later once the customer is "locked in." The main goal of this tactic is to establish a long-term relationship with the customer

Honeymoon pricing

Internet services provides $29.99/month for the first year, then $59.99/month on the next. This is an example of what pricing tactic?

Loss Leader

Is a product sold below its cost or operating margin to attract customers into the store or website. The idea is that once customers are drawn in by the irresistible deal, they will also buy other items that are profitable — helping the store make up for the loss

Loss Leader

₱1 Piso Fare Promos; Cebu Pacific makes up for the discounted fares by charging for:Extra baggage fees; Seat selection (hot seats with extra legroom); In-flight meals & snacks; Rebooking & name change fees. This is an example of what pricing tactic?

Parity Pricing

A tactic where a company sets the price of its product at or very close to a competitor’s price in order to stay competitive and avoid losing market share.

Parity pricing

Two smartphone brands offer similar models. Brand A sells for $699. Brand B sets its price around $699 too, rather than lower, to signal similar quality and stay competitive. This is an example of what pricing tactic?

Price Bundling

This pricing tactic occurs where two or more products or services are priced as a package with a single price.

Peak and Off-peak Pricing

It is a pricing tactic that adjusts prices based on demand at different times—charging more during high-demand periods and less during low-demand periods

Peak and off-peak pricing

Hotels and airlines raise prices during holidays or popular seasons, and offer deals in low-travel months. This is an example of what pricing tactic?

Price Lining

Is a pricing tactic where a business sets a limited number of fixed price points for its products, rather than assigning unique prices to every individual item. Instead of varying the price frequently, the business adjusts the quality, features, or quantity of the product to fit those predetermined prices.

Penetration pricing

Used when a business wants to enter a market quickly and attract a large number of customers right away by offering very low initial prices. The goal is to gain market share fast, even if it means making little or no profit at first.

Prestige pricing

Also known as premium pricing and occasionally referred to as luxury pricing or high price maintenance, this approach involves deliberately pursuing a high price point to create an image of quality.

Price signaling

Is where the price is used as an indicator of some other attribute.

Price signaling

This pricing tactic works best when customers lack full information and use price as a shortcut to judge quality or status.

Price Skimming

The objective of this pricing tactic is to charge relatively high prices to recoup the cost of product development early in the product life cycle before competitors enter the market.

Promotional Pricing

Is a short-term pricing strategy where a company temporarily lowers the price of a product or service below its normal selling price to achieve specific goals—such as boosting sales, clearing excess inventory, or responding to competition.

Psychological Pricing

Is a range of tactics designed to have a positive psychological impact. Price tags using the terminal digit "9", (Php 99.99, Php.199.99 or Php. 999.99) can be used to signal price points and bring an item in at just under the consumer's reservation price.

Two-Part Pricing

It is a variant of captive-market pricing used in service industries. This pricing tactic breaks down the actual price into two components: fixed service fee and variable fee