3.2 Pricing methods Flashcards
Penetration pricing
Setting a low price to attract customers to buy a new product
Skim pricing
setting a low price, usually at launch to maximise profit
Competitive pricing:
Setting a price similar to that of competitor’s products
Cost plus pricing
Setting price by adding a fixed amount to the cost of making or buying the product
Loss leader pricing
Setting the price of a small number of products at below cost to attract customers into the outlet in the hope that they will buy other products priced to earn a profit
at launch high to maximise profit, e.g: YEEZY that are unique and different from other products in market
Skim pricing
at launch low to attract customer and gain market share quickly
Penetration pricing
% to cost of products, might be set higher than competitors and customers willing to pay
Cost plus pricing
similar to competitors which are already established in the market
Competitive pricing:
price of small no of products below cost, to sell off unwanted inventories, increases short-term sales and market shares
Loss leader pricing
Promotional pricing
price is below cost to attract customers. Revenue is lower so profit is lower
