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Various pricing strategies

August 7, 2009

Pricing Strategies:

There are many ways to price a product. The following way of the price strategies are used in the most of business.

List of real business / organization Pricing Strategies bellow

Four Major pricing strategies

Premium Pricing

Penetration Pricing

Economy Pricing

Price Skimming

Other important approaches

Psychological Pricing

Product Line Pricing

Optional Product Pricing

Captive Product Pricing

Product Bundle Pricing

Promotional Pricing

Geographical Pricing

Value Pricing

Premium Pricing => This method uses a high price where there is uniqueness about the product or service. This approach is used where a substantial competitive advantage exists. Such high prices are charge for luxuries

E.g.  Star Hotel rooms and Concorde flights.

Penetration Pricing => The price charged for products and services is set low in order to gain market share. Once this is achieved, the price is increased.

E.g. Youtube.com and Myspace.com giving away free subscriptions to land grab market share for new start-ups.

Economy Pricing => The cost of marketing and manufacture are kept at a minimum.

E.g. Supermarkets often have economy brands for soups, spaghetti, etc.

Web pages designed with minimal cost

Price Skimming => This method charge a high price because there is many substantial competitive advantage. However, the advantage is not sustainable.

E.g. new product launches online such as albums or game.

Psychological Pricing => This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis.

E.g. AirTel : This launch ‘price point perspective’ 99 piece not 1 Rupee a Call for one minute to any other mobiles.

Product Line Pricing => This method having a range of product or services the pricing reflect the benefits of parts of the range.

E.g. many travel agencies provide tour option for even in India

1 person (4 countries) => 49,000

2 person (4 countries) => 62,000

Family pack(2 person ,1 child ) => 65, 000.


Optional Product Pricing =>
Companies will attempt to increase the amount customer spend once they start to buy. Optional ‘extras’ increase the overall price of the product or service.

E.g. Airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.

Captive Product Pricing => This type of pricing on products have complements, companies will charge a premium price where the consumer is captured.

E.g. Buy virus software from one brand, their updates must also come from them. (F-Secure Anti Virus – Free update providing)

Product Bundle Pricing => Here sellers combine several products in the same package. This also serves to move old stock.

E.g. a) Videos and CDs are often sold using the bundle approach

b) Furniture marts sold full house accessories as a pack (Fridge, washing machine, A/c.)

Promotional Pricing => This pricing to promote a product is a very common application.

E.g. BOGOF (Buy One Get One Free).

Geographical Pricing => This type of pricing is evident where there are variations in price in different parts of the world.

E.g. Compare Petroleum products cost in Kuwait and Oman with India.

Value Pricing => This approach is used where external factors such as recession or increased competition force companies to provide ‘value’ products and services to retain sales.

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