To Occupy Your Market Share? – Don`t Forget Pricing Strategy


Have you ever noticed the price of the goods while going to the supermarket? have you ever thought about what`s the differences between $ 0.99 and $ 1.00? Have you ever confused about  why there are always many products are in discount from day to day?

In general, it`s hard for boys spending a lot of time in shopping, but I get the chance to that cause I have a best female friend whose interest is going to the supermarket even though she does not want to buy anything else. For me, I just go with her without purchase anything as well. Therefore, I always check the price label of different kind of goods and think about what kind of pricing strategy the marketer has done to attract customers.

As we known, price is the most important factor in determining profit and normally countless businesses fail to get their pricing strategy right. The price that one company charges for tis products or services is a major way to communicate the firm’s value in the marketplace.

Is there any significant effect by slightly changing the price?

The answer might be yes. For instance, if you might get a large percentage possible increase of your operating profit  by increasing 1% of your price gain. However, this profit can not be achieved by simply reducing 1% variable or fixed costs. but an increase in price goes right to the bottom line.

What kinds of pricing strategies normally utilized in price setting?

There are some common pricing strategies as shown blow:

  1. Penetration Pricing
  2. Optional Pricing
  3. Premium Pricing
  4. Competition Pricing
  5. Value Pricing
  6. Bundle Pricing
  7. Skimming Pricing

I prefer skim pricing  most. the practice of selling a product at a high price, usually during the introduction of a new product when the demand for it is relatively inelastic. This approach is used to generate substantial profits during the first months of the release of a product, usually so that a company can recoup its investment in the product. However, by engaging in price skimming, a company is potentially sacrificing much higher unit sales that it could garner at a lower price point.

For example, ABC International has developed a global positioning system that can lock onto GPS satellite signals even from several feet underwater. This is a substantial improvement over existing technology, so ABC feels justified in pricing the product at $1,000, even though it only costs $150 to construct. ABC holds this price point for the first six months, while it earns back the $1 million development cost of the product, and then drops the price to $300 to deter competitors from entering the market.

Which pricing strategies you prefer best? How do they working in pricing network to increase companies` profits? Can you share you knowledge with us, lets have a discuss.