Types Of Pricing Strategies


Pricing Strategy

Pricing Strategy


Price is the total amount that a consumer pays for a product or service.

Companies tend to determine the optimum price for their product or service based on the market share, positioning & competition and the perceived value of the product.

The same products can employee different pricing strategies over the period of time.


Different forms of pricing strategy are as follows:


Premium Pricing


• Product/Service is unique.

• Perceived Benefit of the product is high.

• High competitive advantage must exist with the marketer.

• E.g. Ferrari, iPhone, Gucci

Premium Priced Product

Penetration Pricing


• Setting the price low with the goal of attracting customers and gaining market share.

• Price is raised once market share is gained.

• Typical in Indian Aviation Industry.

Penetration Pricing

Predatory Pricing


• Selling at extremely cheap rate to quickly increase the market share.

• Works for service based industries like Telecom, Insurance, Banking, IT etc.

• Law may curtail & punish if found it anti-competitive.

Predatory Pricing

Geographical Pricing


• The price variation in different parts of the world can be a business strategy or forced upon by the local market.

• It usually occurs due to difference in PPP, taxes, duties etc.

• Example is Gasoline & Alcohol.

Geographical Pricing

Price Skimming


• Charge a high price initially because product is unique and you have a competitive advantage.

• Advantage is not sustainable and eventually price is reduced due to enhanced competition.

• Flagship Smartphones & other electronics.

Price Skimming