Pricing Policy
Depending on the company's policies and strategies as well as the market environment, the objectives of the pricing policy can be :- Profit maximization – high prices for high quality products with weak competition.
- Sales maximization – low prices based on low costs:
- when the demand is price elastic
- low costs due to economies of scale
- discouragement of competition
- Capitalization of competitive advantages – high prices for products that are absolute novelty on the market, followed by diminishing of the prices as the competition tightens or a market segment with lower income is on the focus.
- Promoting an exceptionally high quality product – high prices that suggest that the product is very qualitative.
- Survival – low prices for a short period to sell off the supply.
Pricing strategies
Depending on the pricing policy's objectives, a company can adopt various pricing strategies that would, on a medium or long term, achieve the objectives.
The main pricing strategies are:
- Price stratification strategy – different prices for different market segments. The products have different features, although they satisfy the same need, and are sold at different prices depending on the purchasing power of each segment.
- Psychological price strategy – high prices that suggest high quality, .99 prices.
- Penetration pricing – low prices in order to attract the customers fast, due to high threat from competitors.
- Promotional pricing:
- Selling at a loss
- Special prices for special events, holidays
- Purchases on credit with low interest
- Psychological sales(high prices, followed by substantial discounts)
- Discount pricing
- Quantity discount
- Seasonal discount
- Cash discount
- Commercial discount