1. What is the best price for my product?
Pricing Strategies
What is the best price for my product?

2. Pricing Questions
What is the perceived value of the good or service by the customer?
Are there any similar products on the market?
What price is the competition asking?

3. Pricing Strategies Cost plus Follow the Competition Penetration
Skimming
Psychological
Loss-leader

4. Cost-Plus Pricing Selling Price = Unit Cost + Markup
Markup % = Selling Price – Unit Cost X 100
Unit Cost
Margin = Selling Price – Unit Cost
The adding of a Markup to the cost
ensures a profit

5. Follow-the-Competition
Price equal to or just below the competition
Watch costs relative to price to ensure profit.

6. Penetration Pricing
New product or service priced significantly below competition
To win market share
If sales volume is large, profit can be high.

7. Skimming When no or limited competition High price set
Watch for competitors moving in!!

8. Psychological Pricing
Prices appear less than they really are
Eg. $ vs. $300.00
$9.99 vs. $10.00
Now $4.96 vs. $4.99

9. Loss-Leader Pricing Selected products or services sold at cost or less
To attract customers who will make other purchases too
This hopefully will more than compensate for the losses on “leader”
“Door Crasher” Sales