Pricing strategy refers to the method a company uses to set the price for its product or service. It is part of the marketing mix and must take into account cost, competition, customer demand and the perceived value of the product.
Types of pricing strategies
- Cost-based pricing strategy: The price is based on the cost of manufacturing the product plus a markup.
- Competitive pricing strategy: The price is set in relation to competitors’ prices.
- Value-based pricing strategy: The price is set based on the perceived value of the product to the customer.
- Psychological pricing strategy: price is set to appeal to customers’ psychological reactions, e.g. prices just below a round number.
In summary, pricing strategy is the method by which a company sets the price for its product or service. It must consider a number of factors, including cost, competition, customer demand, and perceived value. By carefully aligning the pricing strategy with customer segmentation, the customer journey and the defined target group, the company can develop an effective pricing strategy that increases sales and strengthens its market position.