Pricing strategy

Methods of pricing

Cost plus

Competitive

Psychological

Penetration

Price skimming

 

Cost plus pricing

The total cost of producing a product is calculated, and after that a mark-up is added to calculate the price

 

Competitive pricing

The price is calculated after keeping in view the price of competition. Competitive price is normally kept just below the price of competition

 

Psychological

This is also known as “playing with mind price”.

For example keeping $5.99 price instead of $6

 

Penetration pricing

Penetration pricing is when a low price is charged in order to attract customers

 

Price skimming

A high price is charged for a product or service because it either new or of high quality