PRICING STRATEGIES

Pricing Strategy

The pricing policies or methods used by a business to decide what to charge for its products.

Cost Plus Pricing

A pricing strategy that ensures all costs are covered by adding a markup to the unit cost.

Price Skimming

Setting a high price for a new product initially and lowering it over time to maximize revenue before competition emerges.

Penetration Pricing

Setting a low price for a new product temporarily to establish a market position and encourage initial customer purchases.

Predatory Pricing

Setting a price so low that it forces competitors out of business, often considered illegal.

Competitive Pricing

Charging prices similar to what rivals are charging in a competitive market.

Psychological Pricing

• psychological pricing involves tactics that are designed to appeal to a customers emotional response to price by setting the price slightly below a rounded figure

Loss Leader Pricing

Setting a low price for a product to attract customers, hoping they will purchase other, higher-margin products.

Differentiation and USP

A unique selling proposition allows a business to charge higher prices for a distinct product compared to rivals.

Price Elasticity of Demand

Describes how the quantity demanded of a product responds to changes in price; inelastic demand allows for higher prices.

Stage of Product Life Cycle

the different stages a product passes through , such as the introduction, growth, maturity, or decline stage.

Markup

The amount added to the cost price of goods to cover overheads and profit.

Unit Cost

The average cost of producing one unit of a product, calculated as total cost divided by output.