What are the basic principles of pricing?

These include: price skimming, price discrimination, psychological pricing, bundle pricing, penetration pricing, and value-based pricing. Pricing factors are manufacturing cost, market place, competition, market condition, and quality of the product.

What are the main pricing strategies for a new product?

The 7 main product pricing strategies

• Value-based pricing.
• Competitive pricing.
• Price skimming.
• Cost-plus pricing.
• Penetration pricing.
• Economy pricing.
• Dynamic pricing strategies.

What are the three principles of a successful pricing strategy?

Although more than one strategy can achieve profitable results, nearly all successful pricing strategies embody three common principles. They are all proactive, not reactive; value-based, not product-based, and profit-driven, not revenue driven (figure 1).

What do you mean by strategic pricing and its principles?

Strategic pricing is about proactively creating the conditions under which better and more-profitable pricing outcomes are the natural result. Strategic pricing sets a product’s price based on the product’s value to the customer, or on competitive strategy, rather than on the cost of production.

Which one is a principle for setting price?

Three Principles for Setting Price Create value – Innovation, quality and performance combine to drive the perceived value of customers. If any of these components is lacking, the business is failing to create the value that it should.

What are the 5 levels of strategic pricing?

Although every business has a pricing process, it can be difficult to determine where your organization falls in the 5-Levels:

• Level 1: The Firefighter. Firefighters constantly put themselves in harm’s way, often for little reward.
• Level 3: The Partner.
• Level 4: The Scientist.
• Level 5: The Master.