Pricing

9 Types of Pricing Statregies Businesses Use

The price of a product or service can determine who buys it, how customers perceive it, and whether or not is sustainable for the business. Pricing is a crucial factor for maximizing profits and pricing tactics help companies position themselves against competition.

Flex Price - Costs are adjusted based on demand, usage, or user specific data

Advantages

• Creates the ability to adjust prices for a number

of circumstances, including customer demand or

production costs

Disadvantages

• May result in lost customers if they realize they are

paying higher prices than others

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One Price - The same price for the product, regardless of demand or who is buying

Advantages

• Provides customer assurance because the price is

always the same

• Makes it easier to accurately estimate sales thanks

to consistent prices

Disadvantages

• Remains the same, even if production costs increase

or there is an over supply of inventory

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Dynamic Price - prices fluctuating based on current demand, time, and other market factors, rather than a fixed rate

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Optional pricing - A form of upselling—additional products aren’t something you necessarily need, but they do add value to your original purchase

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Captive pricing - charging for accompanying products that are required to use the primary product.

Loss leader – pricing strategy in which a product is priced below cost with a loss expected. While a company takes a loss, it does so with the intent of leading customers to purchase a higher profit product while buying the “loss” product.

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