Cost-plus Pricing – A markup is added to the cost price to ensure a profit

Markup = selling price – cost price

Markup % = selling price – (cost price/cost) X 100

Follow-the-competition Pricing – The price of the product or service is set equal to or slightly below a competitor’s price. The pricing can increase market share, but it is important to be aware of your operating costs so you do not set a price that will result in a loss.

Penetration Pricing – A new product or service is priced significantly below a competitor’s price. This pricing allows the newcomer to win market share from the competition and attract new customers. Selling large volumes at low prices can result in significant profits.

Skimming – When there is no competition, a new product or service can enter the market with a high price. This situation may result in short-term profits, but these profits will drop when competition moves in.

Psychological/Odd Number Pricing – Prices are chosen to give the impression that they are less than they actually are. An example might be pricing a product at $299.99 instead of $300.00.

Loss-leader Pricing – Selected products or services are sold at cost or less than cost to attract customers who will then make other purchases to compensate for the loss of profits.

Consequences of Burning Fossil Fuels

Opportunistic Pricing – Pricing a product or service which takes an advantage of a given situation.

Price Taker – Sellers who must take the market price in order to sell their product

Discount/Promotional Pricing – Pricing strategy used to move merchandise off shelves and/or attract consumers into store in the hopes they will buy something else while they are there.

Variable/Differential Pricing – Pricing a product or service to different market segments. Example: Business Class Airline ticket- $500 Economy Class Airline ticket- $200

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Cite this article as: William Anderson (Schoolworkhelper Editorial Team), "Pricing Strategies," in SchoolWorkHelper, 2019,
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