| what factors affect the setting of a products price? | production cost
how much profit the business wishes to make
what competitors are charging
whether the product has a strong brand
whether the product is perceived to be of a high quality
the stage in the products life cycle |
| what are the 7 pricing strategies a business may use when pricing a product? | low price
high (premium) price
competitive
cost + profit
psychological
destroyer
price skimming |
| describe the low price pricing strategy | setting a price that is lower than competitors |
| describe the premium price pricing strategy | setting a price higher than most other similar products in order to create the image of quality |
| describe the competitive pricing strategy | setting prices in line with your competitor |
| describe the cost plus profit pricing strategy | totalling up the cost of product production and adding on a fixed percentage to reach the selling price (cost + profit = selling price) |
| describe the psychological pricing strategy | charging a price which makes the customer think the product/service is cheaper than it actually is |
| describe the destroyer pricing strategy | setting prices artificially low for a short period of time in order to gain market share from other competitors competitors may be forced to lower their prices too or move out of the market (Illegal pricing strategy) |
| describe price skimming pricing strategy | setting prices very high for a new/innovative product onto the market prices will be lowered over a period of time as the product becomes less popular/out of date |
