Pricing Decisions
Life Cycle of the product
Research and Development, Introduction, Growth, Maturity, Decline
Penetration Pricing
- Setting a low initial price for a new product in order to get a foot in the market and gain a
market share
- This might happen when a firm releases a new product – aim to entice people
- Likely to be used with a price elastic product
Price Skimming
- Setting a high initial price for a new product in order to justify costs
- Customers may want the product as soon as it comes out so they are prepared to pay high
prices to get it
- Once this market has been ‘skimmed off’ the company will lower price
Dynamic Pricing
- Changing the pricing of goods and services as per the customer and market conditions
- Prices change frequently and quickly in response to changes in demand
- Can use technology to track demand and levels of interest
Life Cycle of the product
Research and Development, Introduction, Growth, Maturity, Decline
Penetration Pricing
- Setting a low initial price for a new product in order to get a foot in the market and gain a
market share
- This might happen when a firm releases a new product – aim to entice people
- Likely to be used with a price elastic product
Price Skimming
- Setting a high initial price for a new product in order to justify costs
- Customers may want the product as soon as it comes out so they are prepared to pay high
prices to get it
- Once this market has been ‘skimmed off’ the company will lower price
Dynamic Pricing
- Changing the pricing of goods and services as per the customer and market conditions
- Prices change frequently and quickly in response to changes in demand
- Can use technology to track demand and levels of interest
