![]() This pricing method is a practice of setting the price of products and goods to be equal to the additional cost of producing an extra unit of output. High-Low pricing is a method of pricing where the goods or services offered by the organization are regularly priced higher than competitors, but through promotions, advertisements, and coupons, lower prices are offered on key items. The price of the goods or services includes the variable cost of each item plus a proportionate amount of the fixed costs and is a form of cost-plus pricing. It is a method of pricing which recovers all costs. Target pricing is a pricing method whereby the selling price of a product is calculated to produce a particular rate of return on investment for a specific volume of production.Ĭompanies with high capital investment and public utilities like gas and electrical companies use this strategy. In oligopolistic business market usually, the dominant competitor among several leads the way in determining prices, and the others soon follow. Dynamic PricingĪ flexible pricing mechanism made possible by advances in information technology and this strategy is mostly employed by internet-based companies. Learn more about Pricing and Output Determination under Oligopoly here in detail 6. For example, selling goods on profit at ₹ 4.95 or ₹ 4.99, rather than ₹ 5.00. In this pricing designed to have a positive psychological impact on the customers. For example, this can be for different classes of buyers, such as ages, or for different opening times. Price discrimination is setting a different price for the same product in different segments to the market. The price can be raised later once this market share is gained. Setting the price lower than what it is offered by other competitors in order to attract customers and gain market share. The limit price is often lower than the average cost of production. Limit PricingĪ limit price is a price set by a monopolist to discourage economic entry into a market. The firm calculates the cost of producing the good and adds on a percentage (profit) to that price to give the selling price. Types of Pricing Strategiesįollowing are the types of pricing strategies While setting prices, one needs to consider various factors like demand and supply of goods or services in the market, selling and distribution cost, offerings of competitors in the market, target customers, etc. Good pricing strategies help in determining the price point at which one can maximize profits on the sale of its goods or services. 2 Examples of Pricing Strategies Pricing Strategies
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