Pricing Strategy

  • Created by: Gaynor
  • Created on: 06-03-18 16:02
View mindmap
  • Pricing Strategy
    • Cost Plus
      • A cost-based method for setting the prices of products
      • It is done by calculating the percentage for the profit of the product to come to an overall price
      • The business knows how much profit they are going to make off each product
      • The price may be too expensive for some customers
    • Penetration
      • usually used by newer businesses
      • It attracts attention to the product if it is rather cheap
      • Only short term
    • Skimming
      • A price that is set as high as customers would be willing to pay
      • It allows the business to make as much money as they can, as the customers will be willing to pay it
      • Some customers may not be able to pay the higher price.
    • Differential
      • Charging prices to certain customers for the same product
      • The business would be able to make more money from the richer customers as they can afford and would be willing to pay the extra price
      • It may not work
    • Promotional
      • The products will be sold faster as more customers would buy them at a lower cost
      • May loose profit
    • Psychological
      • Setting a price that makes the product look cheaper than it is
      • The customer would think that the product is cheaper so they would be more likely to buy it
      • People may not fall for it

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all Finance resources »