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Cost-Based (pricing based on cost of product) |
Cost-Plus |
Cost + Desired Profit Margin |
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Target-Return |
Cost × Desired Return on Investment |
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Geographic/Seasonal/Population |
Different price for different locations, groups or seasons |
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Competitor-Based (pricing based on prices of competing products) |
Price-Matching |
Price = competitors |
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Price-Undercutting |
Price << competitors |
Elastic demand
Maximize quantity sold
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Demand-Based (pricing based on customer demand) |
Skim Pricing |
High for customer segment that has inelastic demand |
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Penetration |
Low to maximize adoption |
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Premium (prestige) |
High to signal quality |
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Economy |
Low to maximize quantity sold |
Highly elastic demand
Low costs
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Captive Product |
Very High for Customers who must have the product |
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Geographic/Seasonal/Population |
Different price for different locations, groups or seasons |
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Portfolio-based (pricing based on other products in the manufacturer's portfolio) |
Price Lining |
Similar price for all product offerings |
Simplifies accounting
Less flexible
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Bundle |
Price for combined package of several products |
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Product Line |
Price different products in portfolio based on their relative value |
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Goldilocks (Framing) |
High so that lower priced products looks better by comparison |
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Loss Leader |
Very low to draw customers to portfolio |
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Optional Product |
Offer “extras” for additional price |
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