Pricing Methods

Question 1

Cost Plus

Answer 1

Pricing based on calculating the cost it takes to make a product and then adding a percentage on top of that to determine the price of the product

Question 2

Competitive

Answer 2

Basing prices solely on competitors’ pricing in your market

Question 3

Penetration

Answer 3

Initially offering a product at low price to gain customers’ attention. The goal is to aggressively get customers in through the door with low prices and gain market share

Question 4

Skimming

Answer 4

Sets prices of a product initially high and then lowers them as competitors enter the market.

Question 5

Promotional

Answer 5

Temporarily reducing the price of a product or service to quickly attract customers