Pricing Stratagies Flashcards
What are the pricing strategies
Competitor based
Price skimming
Price penetration
Psychological pricing
What is competitor based pricing
Similar price to the competitor
What is price skimming
High price to start then lower over time
What is Price penetration
Start as a low price then gets higher over time
What is psychological pricing
99p the idea of getting change
What are the advantages of price skimming
A high price establishes that it is a must have item
Innovation is expensive so the high price will help pay that off
What are the disadvantages of price skimming
Customers may become disloyal
When companies cut their image may suffer
Advantages of price penetration
Low prices may attract lots of customers
High sale volumes help cut product costs per unit
Disadvantages of price penetration
Low prices may make product quality look bad
Customers may get annoyed at prices raising
