The pricing of any product is extremely complex and intense as it is a result of a number of calculations, research work, risk taking ability and understanding of the market and the consumers.
Before pricing a product, you have to understand everything including the segment of the product, the ability of a consumer to pay for the products, the conditions of the market, action of the competitor, the cost of product, and of course the margin or the profit margins.
Penetration Pricing – This strategy is used to enter the market and to gain market share. You can keep a low price for a few products or a limited time only. This strategy is used to set up your customer base.
Psychological Pricing Strategy – This strategy approach of gathering the consumer’s emotional respond instead of his rational respond. For example a company will price its product at RM99 instead of RM100. This makes the customer feel that the product is not very expensive.
Promotion Pricing – Promotional pricing is very common these days. You will find it almost everywhere. Pricing for promoting a product is a very useful and helpful strategy. These promotion offers can include, discount offers, gift or money coupons or vouchers, buy one and get one free, etc. to promote new and even existing products companies do adopt such strategies where they roll out these offers to promote their products. An old strategy yet it is one of the most successful pricing strategies till date
Product Life Cycle Pricing (advanced) – These pricing strategy will varies depending on each specific product life cycle.