- Premium Pricing: Premium pricing strategy establishes a price higher than the competitors. It is a strategy that can be effectively used when there is something unique about the product or when the product is first to market and the business has a distinct competitive advantage. Premium pricing is often most effective in the early days of product’s life cycle, and ideal for small businesses that sell unique goods. An organization must work hard to create a value perception because customers need to perceive products as being worth the higher price tag. Along with creating a high quality product, owners should ensure their marketing efforts, the product’s packaging and the store’s décor all combine to support the premium price.
- Penetration Pricing: Penetration strategy aims at attracting consumers by offering lower prices of products and services. It means that a penetration pricing strategy is designed to capture market share by entering the market with a low price relative to the competition to attract buyers. The objective is to make the people try the product. Though penetration pricing may initially create a loss for the company, it is believed that it will help generate word-of-mouth and create awareness amid a crowded market category.
- Economy Pricing: Economy pricing strategy aims to attract the most price conscious consumers. With this strategy, business minimizes the costs associated with marketing and production in order to keep product price down. As a result, customers can purchase the products they need without frills. Through economy pricing strategy, an organization adopts a very basic, low-cost approach to marketing. It just keeps prices low and attracts a specific segment of the market that is very price sensitive. Economy pricing is a familiar pricing strategy for organizations that include Wal-Mart and Aldi, a food store, whose brand is based on this strategy.
- Price Skimming: Price skimming strategy is designed to help an organization maximize sales on new products and service; price skimming involves setting high price during the introductory phase. Then, the company lowers down prices gradually as competitors products appear on the market. One of the benefits of price skimming is that it allows businesses to maximize profits on early adopters before dropping prices to attract more prices sensitive consumers. Not only does price skimming help a small business recoup its development costs, but it also creates all illusion of quality and exclusivity when your item is first introduced to the market place.
- Psychology Pricing: In the market, price remains a major concern for consumers. Psychology pricing refers to techniques that marketers use to encourage customers to respond on emotional level rather than logical one. For example: setting the price of a pair of jeans Rs.399 is proven to attract more consumers that setting it at Rs.400, even through the true difference here is quite small. In fact, consumers tend to put more attention on the first number on a price tag than the last. The goal of psychology pricing is to increase demand by creating an illusion of enhanced value for the customer.
- Bundle Pricing: With bundle pricing, small business sell multiple products for a lower rate than consumers would face it they purchased each item individually. It is not only an effective way of moving unsold items that are taking up space but also can increase the value perception in the eyes of the customers since they get essentially something free. Bundle pricing is more effective for companies that sell complimentary products. For example, a restaurant can take advantage of bundle pricing by including dessert with every entrée sold on a particular day of the week.