pricing stratagies

Question 1

what is cost plus pricing?

Answer 1

• this is the simplest pricing strategy where the cost of making the product is calculated before a % is added on for profit

• this is effective because this method ensures that the cost of making the product is covered and a profit is still made

Question 2

what is psychological pricing?

Answer 2

• this pricing method is used when a business makes a customer think the product is cheaper than it actually is

• this is effective because it tricks the customer into thinking that the product is a lot cheaper and will therefore buy it. it attracts impulse buyers

Question 3

what is promotional pricing?

Answer 3

• this pricing method is used when a product is charged lower than normal for a short period of time. usually on new introductory products

• this is effective to try and attract customers to buy the roduct because it is on special offer

Question 4

what is high pricing?

Answer 4

• price is charged high, usually higher than competitors

• this is effective because customers might buy into this thinking that the product they are buying is of a higher quality than the competitors

Question 5

what is low pricing?

Answer 5

• the price is charged lower than competitors

• this is effective because customers will buy the product because it is cheaper than competitors

Question 6

what is premium pricing?

Answer 6

• a long term consistent high price

• this is effective because it will make products appear more unique and exclusive