Types of pricing strategies pdf

Department of economics, new l j commerce college, ahmedabad, india. In other words, costbased pricing can be defined as a pricing method in which a certain percentage of the total cost of production is added to the cost of the product to determine its selling price. These two types of pricing are based on signaling theory through which it is understood that in limit. Costplus pricing simply calculating your costs and adding a markup. Premium pricing, also called image pricing or prestige pricing, is a pricing strategy of marking the price of the product higher. Product and pricing strategies programs, courses aiu. Generally, pricing strategies include the following five strategies. Just the bare minimum to keep prices low and attract a specific segment of the market that is highly price sensitive. Here are ten different pricing strategies that you should consider as a small business owner.

Costbased pricing can be of two types, namely, costplus pricing and markup pricing. The former is used in the early stages of a product to competitive entry and the latter is executed after the entry. Competitive pricingsetting a price based on what the competition charges. How to choose a pricing strategy for your small business. A p ricing strategy has a s goal to establish an optimum price with current profit maximization, maximization o f the number of units sold, etc. The former is used in the early stages of a product to. Examples of companies focusing on this type of pricing include walmart, lidl and aldi. However, regardless of the policy used, price must be justified by value to the. An effective pricing strategy includes elements of several methods. This type of pricing takes a very low cost approach. Product mix strategies product mix pricing strategies x involve adjusting prices to maximize the profitability for a group of products rather than for just one item. Valuebased pricingsetting a price based on how much the customer believes what youre selling is worth. Introduction to the pricing strategy and practice pdf cbs. Pricing strategies and levels and their impact on corporate.

Price lining and bundle pricing optional and captive product pricing product mix pricing strategies adjusting prices to maximize the. Loss leader pricing specialevent pricing promotional pricing a pricing technique in which prices are reduced for a short period of time. As weve just identified, project management and strategic, actionable decisions go into setting the price of a product. The ultimate guide to pricing strategies hubspot blog.