PRICING STRATEGIES

Cost-Based Pricing
Demand-Based Pricing Value-Based Pricing Customer Engagement Pricing

Cost-Plus Pricing Dynamic Pricing Value-Based Pricing Freemium Pricing

Economy Pricing Geographical Pricing Premium Pricing Pay What You Want (PWYW)

Psychological Pricing Promotional Pricing

Competition-Based Pricing Market Segmentation Pricing

Psychological Pricing Promotional Pricing Competitive Pricing Bundle Pricing

Anchor Pricing High-Low Pricing Penetration Pricing Price Discrimination

Decoy Pricing Loss Leader Pricing Skimming Pricing Tiered Pricing

Cost-Based Pricing
• Cost-Plus Pricing: Adding a standard markup to the cost of the
product.
• Example: A furniture maker who adds a 50% markup to the cost of
production.

• Economy Pricing: Setting a low price by minimizing costs wherever

possible.
• Example: Budget retailers like Walmart or dollar stores that focus on
minimizing operational costs to keep prices low.
Demand-Based Pricing
• Dynamic Pricing: Changing prices based on current market demands
and capacities, often in real-time.
• Example: Airline tickets or hotel rooms priced differently based on booking
demand.

• Geographical Pricing: Setting prices based on location or market

segment.
• Example: International pricing strategies where companies charge different
prices for the same product in different countries.
Value-Based Pricing
• Value-Based Pricing: Setting the price based on the perceived value
to the customer rather than the actual cost.
• Example: Consulting services where fees are based on the value delivered to
the client rather than the time spent.

• Premium Pricing: Maintaining a high price to encourage perceptions

of quality and exclusivity.
• Example: Luxury brands like Rolex or Louis Vuitton that command high prices
due to their perceived prestige.
Customer Engagement Pricing
• Freemium Pricing: Offering a basic product or service for free while
charging for premium features.
• Example: Software tools like Zoom or Spotify that offer free basic versions
with paid premium options.

• Pay What You Want (PWYW): Allowing customers to pay any amount
they feel the product or service is worth.
• Example: Humble Bundle, where customers can choose how much to pay for
a bundle of video games.
Psychological Pricing
• Psychological Pricing: Setting prices that have a psychological impact, like
$19.99 instead of $20.
• Example: Retail pricing that uses ".99" to make prices seem lower than they actually
are.

• Anchor Pricing: Setting a high price to establish a high perceived value and
then offering the product at a lower price.
• Example: Initially marking a product at $100 then putting it on sale for $75.

• Decoy Pricing: Introducing a third pricing option to make one of the other
two seem more appealing.
• Example: Subscription models where a mid-tier price is introduced to make the
highest tier seem like better value.
Promotional Pricing
• Promotional Pricing: Temporarily reducing prices to increase short-term
sales.
• Example: Black Friday sales where products are significantly marked down.

• High-Low Pricing: Initially setting prices high and lowering them through
promotions or negotiations.
• Example: Seasonal goods like fashion apparel or holiday decorations.

• Loss Leader Pricing: Selling a product at a loss to attract customers and

make up the profits on additional purchases.
• Example: Supermarkets selling milk or bread at a loss to draw customers into the
store.
Competition-Based Pricing
• Competitive Pricing: Setting a price based on what competitors are
charging.
• Example: Gas stations often set prices based on nearby competition.

• Penetration Pricing: Setting a low price to enter a competitive market and

raising it once market share has been captured.
• Example: Streaming services like Disney+ launching at a low price point to quickly
attract subscribers.

• Skimming Pricing: Setting a high price initially and then gradually lowering
it to access different layers of the market.
• Example: New technology products like smartphones or TVs that start expensive and
become cheaper over time.
Market Segmentation Pricing
• Bundle Pricing: Selling multiple products for a lower rate than they would
be if sold separately.
• Example: Cable companies offering bundles of TV, internet, and telephone services
at a discount.

• Price Discrimination: Charging different prices to different market

segments for the same product or service.
• Example: Movie theaters offering discounted tickets to seniors and students.

• Tiered Pricing: Offering products or services at several pricing points that

offer different levels of quality or features.
• Example: Software as a Service (SaaS) products like Salesforce offering multiple
subscription levels tailored to varying