Price Flashcards
Price considerations
What competitors are charging
Cost of producing the product
How much profit you want to make
Demand for the product
Who your target market is
What stage of the Product Life Cycle your product is in
Cost Plus Pricing
Description: The cost of making/buying a product plus a % of profit.
Justification: A simple way to price all products.
Psycological Pricing
Description: When the price of a product ends in 99p.
Justification: Gives the impression that the product is less expensive.
Promotional Pricing
Description: When business reduces its price for a short period of time.
Justification: To reduce stock levels before the change of a season.
Competitive Pricing
Description: When you price match your competitors or put your prices lower than your competitors.
Justification: To steal your competitors customers.
Premium Pricing
Description: When a product is sold at a high price at all times.
Justification: Gives the impression that products are of high quality.
Penetration Pricing
Description: When a product is sold at a low price when it is first launched on to the market.
Justification: Encourages customer loyalty and to break brand loyalty.
Loss Leaders
Description: When a select few goods are sold at a loss and are highly advertised.
Justification: Gives the impression that all goods are low in price.
Market Skimming
Description: When a high price is charged when a product is launched onto the market.
Justification: To steal your competitors customers.
Destroyer Pricing
Description: When a large business reduces its prices to eliminate competition.
Justification: Can charge a higher price when there is less competion
High Price
Description: When a high price is charged.
Justification: Gives the impression that the product is of high quality.
Low Price
Description: When a low price is charged.
Justification: May convince customers to buy from you over a competitor.
