Comprehensive Pricing Strategies and Policies in Marketing

Skimming Pricing

Setting a high initial price to capture the "cream" of the market before lowering to attract other segments.

Penetration Pricing

Setting a low price to reach the entire market and quickly gain market share.

Meeting the Competition

Setting prices below, at, or above competitors' levels.

Cost-Oriented Pricing

Prices are based on production costs per unit plus a markup for profit.

One-Price Policy

All customers pay the same price under the same conditions and quantities.

Flexible Pricing

Same product/quantity sold at different prices to different customers.

Suggested Retail Price (SRP)

Manufacturer's recommended price printed on product, invoice, or catalog.

List Prices

Published prices that remain the same for a long period.

Prestige Pricing

Intentionally high prices set to signal exclusivity or luxury.

Leader Pricing

Pricing certain products very low to attract customers into the store.

Bait Pricing

Advertising a product at a very low price, then steering customers to higher-priced items (illegal).

Odd Pricing

Prices ending in odd numbers (e.g., $7.95, $8.95) to appear cheaper.

Psychological Pricing

Prices chosen because they seem appealing or fair to customers.

Price Lining

Setting a few fixed price points for a product line (e.g., ties at $8, $16, $25).

Demand-Oriented Pricing

Prices are set based on expected customer demand and revenue potential.

Cash Discounts

Price reduction for paying bills early (e.g., "2/10, net 30").

Functional (Trade) Discounts

Price reductions given to wholesalers/retailers for performing distribution or marketing functions.

Quantity Discounts

Price reductions for buying in large amounts: • Noncumulative: for a single order. • Cumulative: based on total purchases over time. • Seasonal: for buying before demand peaks.

Promotional Allowances

Discounts given to retailers for promotional activities (e.g., displays, cooperative advertising).

Trade-Ins

Allowances given to customers when they exchange an old product while buying a new one.

Push Money (Prize Money)

Manufacturers/wholesalers pay retailers so salespeople earn bonuses for aggressively selling certain products.

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