Pricing Strategies
What is competitive pricing?
When a business must monitor what its competitors are charging for their products because it is a competitive industry.
Benefits of cost-based pricing
Saves time and money. Reduces the risk of under or overpricing a product or service
Free spot
Heres your free points
Price fluctuations of variable costs
Why do people use the ending with "9" strategy?
The number 9 creates the perception of a bargain and triggers a sense of getting a better deal, enticing customers to make a purchase.
Fun fact: Prices ending in 9 were so effective they were able to outsell even lower prices for the same product.
What is Cost-Plus pricing?
When one adds a certain percentage to the price, based on the costs it took to make the product.
Benefits of competitive pricing
Creates realistic prices and diffrentiate products
Limitations of promotional pricing
Lower unit per cost, makes consumers question the quality
Adapting to inflation
You have to be prepared for inflation by:
-200
Sorry :)
No points
No points for you bud
Benefits of Penetration pricing
Lower prices for newly launched products, ensures sales, and market share build up quickly, and can easily enter the market
Limitations of Price skimming
Difficult to implement if competitors are making similar technologies. Works best with inelastic demand.
Selecting the correct price strategy
No points! :D
sorry
It is when the price is set lower than the competitors price.
-400
its ok! keep going
Limitations of competitive pricing
Free spot
You get free points
What is price anchoring?
a promotion strategy where a product at a higher price is set against the lower-cost option
example:
For 25GB you need to pay $25
But for 50GB you only need to pay $49!
What is price skimming?
When a new invention or innovation is sold at a high price to cover the costs of heavy research
Benefits of price skimming
Establish a product as good quality, research costs are easily recovered, if the product is unique
Limitations of price skimming
When should the price increase
Does utilizing a price with more syllables make the consumer enticed to buy it or not?
Consumers seem to find prices with fewer syllables "smaller" in price.
For example: You have 3 prices. A study experimented and showed that $1499 sounds little compared to the other 2 prices. Therefore making the product with $1499 a popular choice.