Consumers, like companies, have their eye of the bottom line. That makes the right price a key element in your irresistible offer. So let’s take a moment and look at the four main pricing policies / strategies.
- Premium Pricing – Used when a product is considered unique and where a substantial competitive advantage exists. Premium pricing is associated with luxury brands like Louis Vuitton, Jaguar, and Rolex
- Price Skimming – In this instance, a high price is set because you have a substantial competitive advantage, but know that the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. This technique was employed in the 1970’s by watchmakers who created digital timepieces and offered the unique product at a premium price. As other digital manufacturers entered the market, other marketing strategies and pricing approaches were implemented to keep the original watches competitive
- Penetration Pricing — Charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV
- Economy Pricing — This is a no-frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc
In the minds of some consumers “Quality costs.” Considering selling your product or service at a higher price than your competitors. People usually associate higher-priced product with better quality.
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