| Strategy Name | Often Used When… | Keep In Mind… |
| Cost-Plus Pricing | A business wants to cover its own costs on its sales, while also adding in a safety buffer that could cover them through slower periods and/or unexpected expenses | Overhead costs can be tough to calculate when resources are shared among different business components. Does not consider external market situation |
| Break-Even Pricing | A company wishes to cover its own costs with a product or service | Long-term viability is questionable, since a firm using this strategy is not directly profiting from it |
| Going-Rate Pricing | A company is launching a new product or service, and looks to the market for general pricing guidance | While this method may seem unsophisticated, it leverages the “wisdom of crowds” |
| Prestige Pricing | A company is targeting a consumer audience for whom big spending is a marker of status | During economic downturns, prestige pricing could prove especially unpopular |
| Skimming Pricing | A company has a segment of loyal consumers that are not price- sensitive, and who will pay a premium for the ‘latest and greatest’ release of any product | At some point, even the most loyal fans of a certain company or product could grow tired of new releases. As more versions come out, cost-savvy buyers will have even more options among the alternative models. |
| Penetration Pricing | A company wishes to ‘hook’ consumers with a low price, in the hopes of either raising that price later (for services) or selling a related product (for goods) | Most likely to be used when the company can absorb a short-term loss on a product or service. |
| Promotional Pricing | A company wishes to generate excitement among consumers by periodically offering discounts on some items | Consumers may begin to anticipate periodic sales, and delay major purchases during periods prior to expected price discounts |
| Everyday Low Pricing | A company wishes to offer a straightforward, no-nonsense proposition for consumers: We will spare you all the hassles of coupons, rebates, discounts, etc. and just give you the best price we can | With some consumers, this method might be more popular in theory than in reality – those who miss the excitement of bargain-hunting could become bored by everyday prices (even low ones!) |
| Value-Based Pricing | A company produces something very specific and unique for each client, and can price based on the client’s perceived value. | Would not work well with any product or service being sold at scale; separate calculations for each client may be too onerous and impractical. |
| Loss Leader Pricing | A company wishes to attract more visitors to its location, and prices some items below their own cost, in order to attract customers | Involves some risk to the seller – what if buyers do not purchase other goods? |
| Price Discrimination | A company’s customer segments have varying degrees of “willingness to pay” and the company can tailor prices to reach these segments separately | Some consumers may resent a firm for charging different prices to other customers |
| Versioning | A company identifies distinct market segments with distinct needs, and wishes to appeal separately to each group with a different offering | Very easy to confuse with price discrimination; with versioning, the product or service being delivered to each group is unique |
| Bundling | A company thinks it can “upsell” to a consumer who has already shown an interest or willingness to purchase something else. | Works well with low marginal cost items, as the seller can take pricing risks without incurring per-item losses. Could be a turnoff to some consumers if they feel they are being manipulated into making additional purchases. |
