The following are a few pricing strategies that businesses adopt:-
#1 – Price Skimming
A skimming pricing strategy is a pricing technique in which a business sets its initial price high and gradually lowers it when more competitors enter the market. This is ideal for businesses that are entering an emerging market. Here, businesses maximizes profit utilizing the price demand of certain markets. They possess the first-mover advantage, where they are the first to introduce or market the product or service. The skimming pricingstrategy makes a profit in the early stages of the product or service’s market until other competitors enter and supply increases.
#2 – Pricing for market penetration
It is the opposite of price skimming. Skimming starts with huge prices, and the penetration pricing strategy uses low prices to enter the market. This is done to attract the existing consumer base of the competitors. Once there is establishment of a reliable pool of consumers, the costs slowly increase. Penetration pricing strategy depends mostly on the ability of the business to bear the losses made in the initial years. Big MNCs especially employ this to get a strong footing in developing countries’ markets.
#3 – Premium pricing
Premium pricing strategy involves businesses that create high-quality products and market them to high-income or net-worth individuals. The key here is to manufacture unique, high-quality designs and products that convince the users to pay such huge amounts. The premium pricing strategy targets the luxury goods market.
#4 – Economy pricing
The strategy targets customers who prefer to save money. Big companies employ the strategy to make customers feel they are in control. Walmart in the U.S. is an example where they offer deals that please customers. This does depend on the overhead costs and the value of the products.
#5 – Bundle pricing
As the name suggests, it is a strategy where a business sells a bundle of goods together. Typically, the total of the goods is lower than the individual products sold separately. This helps in moving the inventory and selling the stocks that are left over. The strategy has the potential to make profits (or save from losses) on low-value items.
#6 – Value-based Pricing
A concept is similar to premium-based pricing. Here, the business decides the price based on the customer’s valuation of the product’s worth. This is best suited for unique products.
#7 – Dynamic Pricing
A dynamic pricing strategy in marketing involves changing the price of the items based on the present market demand.
