Pricing Strategies

Price is the value for a product or a service. Pricing depends on various factors like segment, ability to pay, market conditions, competitor actions, input costs, etc. Basic pricing strategies are –

1. Premium Pricing

• Unique products are sold with higher price than usual. Product packaging, store decor support premium pricing.

• Example: Apple iPhone, Porsche Cars, etc. have an edge over other products due to its premium quality.

2. Penetration Pricing

• Prices are set lower initially when the product is launched. This is due to promotional activities and discounts, cashbacks, etc. is offered for certain period.

• Example: Mobile phones rates in India.

3. Economy Pricing

• This strategy is for the masses where market share is high and so the rates have to be the lowest in this segment.

• Example: FMCG products like toothpaste, Maggi, Coke, etc.

4. Price Skimming

• This strategy is for the products which has no competition and so companies dominate the market and charge higher price from customers,

• Example: Apple iPad was priced exorbitantly high when it was launched as it has no competitors. Over the years due to other players, iPads have got cheaper.

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