EDUCATION 101: Pricing.

Principles of Marketing


Price can be defined as a measure of value exchanged by the buyer for the value offered by the seller. It is the worth of the product. Pricing is influenced by both internal factors (marketing objectives, marketing mix strategy, cost of production) and external factors (The demand, supply, type of market, consumers perception, competition, government regulations)


Penetration pricing

It’s when you set the price of products lower than that of competitors

Price Skimming

When you set product price higher than competitors

Competitive pricing

You set price of your product in line with competitors

Cost plus pricing

When a marketer adds a mark-up (percentage of profit) on the initial cost of producing a product

Discriminatory pricing

You sell the same product at different prices based on the target market, geographical location or timing

Psychological pricing

When you set a price in consideration of consumers emotions not their economics. For example you sell a product at 199, 149

Promotional pricing

You set the price of a product low for some time (short period) of time then you increase it. This strategy is employed to increase the product life cycle.

Loss leader pricing

You sell your product at a loss knowing that as consumers buy the product being sold at a loss, they are likely to buy other products offered by the organization.

Value based pricing

Setting a price based on consumers perception and not the sellers expectations

Demand oriented pricing

Pricing based on the demand prevailing in the market.



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