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Pricing Methods Advantages Disadvantages Flashcards | StudBud
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Pricing Methods Advantages Disadvantages
Pricing Methods Advantages Disadvantages
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1
Benefit of skimming
Will give firms high profits while the price is high
Competitors may bring out a lower-priced product
High prices can give a product a good image
May put off some customers because of the high price
2
Can be used as a long term pricing method
Psychological
Skimming
Competitive
Promotional
3
Useful to get rid of unwanted stock that will not sell
Promotional
Competitive
Penetration
Skimming
4
Drawback of promotional pricing
Can be risky if sales don't rise
Can renew customer's interest in products with falling sales
Revenue is lower on each product, so profits will be lower
Useful to get rid of unwanted stock
5
May put off some potential customers because of the high price
Penetration
Competitive
Promotional
Skimming
6
Pro of psychological pricing
Can be used as a long term pricing method
Attracts customers who are looking for "value"
Feel like they're getting a bargain, so increases sales
Lower priced products may be considered poor quality
7
Ensures that sales are made and the new product enters the market
Skimming
Competitive
Penetration
Promotional
8
Have to research what your competitors are charging which costs times and money
Penetration
Skimming
Promotional
Competitive
9
Con of penetration pricing
Does not help pay back research and development costs
Sold at a low price and therefore sales revenue may be low
Not good for products with short product life cycles
Good for increasing market share quickly
10
Advantage of Competitive pricing
May only cover production costs resulting in low profits
Not over/under priced so sales are likely to be high
Research costs time/ money
Sell at a loss in order to be competitive
