Pricing Strategies

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  • Created by: Jessica
  • Created on: 19-03-12 16:51

Pricing Strategies

When companies are considering what price to charge, in the first instance they usually consider these things.

  • Costs
  • Market demand i.e. what customers will pay
  • behaviour of competition

For Profits

  • Pricing at profit-maximising level
  • Price discrimination
  • Smart-pricing (1st degree price discrimination)

For growth

  • Revenue maximisation - MR = 0
  • Sales maximisation - price = AR = MC

For new products

  • Creaming/skimming - taking the best bit off first e.g. in technology, products are usually introduced at a very high price so firms can capitalise on those willing to pay before lowering it to a price more suitable for a mass market
  • Penetration pricing - often used for repeat purchase products requiring brand loyalty, this involves introducing at a…


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