Major Pricing Methods Followed by Business Enterprises Class 12

In reality, it’s difficult to ascertain exactly which pricing policy a firm practices. A firm uses a combination of different policies at once. The major pricing policies followed by business enterprises are discussed below:

  1. Competitive Pricing:

Sets prices based on competitors’ rates, common in markets with little product differentiation. e.g. Coca-Cola introduced 200ml bottles at ₹ 8, prompting Pepsi to match the price.

  1. Penetration Pricing:

Low initial prices to gain market share. e.g. Nirma used this to outcompete Surf by pricing its detergent powder lower.

  1. One Price vs. Variable Price Policy:

One-price policy: same price for similar customers e.g. bulk discounts. Variable-price policy: different prices for similar products to different customers, such as discounts for loyal buyers.

  1. Market Skimming Pricing:

High initial prices to recover investments quickly. e.g. Apple’s iPhone 7 was highly priced at launch to maximize early profits before competitors entered.

  1. Discrimination or Dual Pricing:

Different prices based on customer’s ability to pay. Common with service industries like legal and medical services where fees vary per client.

  1. Premium or Prestige Pricing:

High prices for high-quality, unique products. e.g. Van Heusen shirts cost more than local brands due to superior quality and brand reputation.

  1. Leader Pricing:

Temporary price cuts on popular items to draw customers who then buy other regular-priced products. These loss leaders boost overall sales.

  1. Psychological Pricing:

Prices set to influence buyers psychologically, like odd pricing (₹ 99 instead of ₹ 100) to make prices seem lower.

  1. Price Lining:

Retailers offer different quality products at different price points. e.g. readymade shirts at ₹ 90, ₹ 150, and ₹ 500 for different quality levels.

  1. Resale Price Maintenance:

Manufacturers set a minimum price to maintain product value and brand image. Distributors agree not to sell below this price.

  1. Everyday Low Pricing:

Prices adjusted daily based on demand and supply, especially for perishable goods. e.g. vegetable prices fluctuate throughout the day.

  1. Team Pricing:

Bundling products or services at a lower price than if bought separately. e.g. include car option packages and value meals.

Major Pricing Methods Followed by Business Enterprises Class 12

 

Types of Pricing Class 12