Pricing Basics
This pricing strategy sets the price LOW to attract as many customers as possible from the start.
Penetration pricing
Before a customer tries your product, your price already tells them something. Name one of the three signals a price sends.
Value, competition, or image (any one accepted)
The cheapest pricing strategy always generates the most daily profit
False — profit = price minus cost × volume. Low price compresses margin
This pricing strategy sets the price HIGH at launch to capture early adopters willing to pay a premium
Skimming pricing
A coffee shop charges €5 per cup. A rival charges €1. What does the higher price signal before anyone tastes it?
A premium brand / quality image
In life-cycle pricing, you start with a low price and raise it over time
False — you start HIGH then lower the price as competition increases
€2.99 instead of €3.00 is an example of this pricing tactic. What is it called?
Odd pricing
True or false: customers always choose the cheapest option available.
False — customers pay for perceived value, not lowest cost
Guerrilla marketing requires a large budget to be effective.
False — it replaces budget with creativity
This pricing structure charges customers a recurring fee for continued access to a product.
Subscription pricing
This company gives users a free tier and charges for premium features. Name the pricing model AND one company that uses it
Freemium — e.g. Spotify, Duolingo, Dropbox
A company's pricing decision only affects revenue, not brand image
False — price signals brand identity before the customer even tries the product
A company charges different prices in different cities for the same product. What pricing tactic is this?
Geographic pricing
Patagonia charges more than most outdoor brands. What does their price communicate to the customer?
Answer: Environmental responsibility and premium quality — a brand for a specific type of customer
Dynamic pricing means charging the same price to every customer at all times.
False — it changes based on time, demand, or segment (e.g. Uber surge pricing)