Pricing Strategy

Pricing3In a highly competitive world where shelves upon shelves are lined with a myriad of products available to consumers, brands have to be more innovative with their pricing to attract consumers without exorbitantly compromising their profit margins. The following are some strategies/ideas to get you started:

Selling strategy for low margin products

Creating even the slightest difference between you and your competitor’s price is a key factor in trying to attract price-sensitive customers. Even a differential of mere cents is enough to convert a consumer to your brand. You want to create an environment where price-sensitive customers are attracted enough to buy in bulk so that your lower margins for profit are covered.

Variation in price range for the product offering

Providing a varied price range is also a beneficial strategy.  A range of shampoos that are priced say at, $3, $7 and $17 will target a host of consumers that range from the most price-sensitive to a middle range to a premium product buyer. By offering this segmented pricing, you are able to target a larger group of consumers. Thus, your profit margin increases with the variation of the product offering.

Use of weak product to leverage selling of stronger products

There is always a weak product in the larger product line and range that a company offers. However, at times it is more expensive to kill the product line altogether. Instead, businesses may choose to couple the higher generating product with the weak one for an overall healthy sale. McDonald’s is a strong example to illustrate this point. It may come as a surprise, but the burgers at McDonald’s are not their cash cow. The fries are. Hence, creating meal options with fries and a beverage compensate for the lack of revenue that the weaker product brings in.

Bundle your products (or de-bundle them)

Some companies find it beneficial to bundle products together, while others find that they can generate more revenue by selling products separately.

De-bundling products works especially well for an industry like the airlines. You buy your ticket, but you can choose to purchase food or beverages or various other in-flight products depending on what your preference is. This allows for greater revenue generated.

Concurrently, you may wish to bundle items together, thus selling more merchandise and eventually generating revenue. For example, many media-service companies offer deals on ‘packages’ that could include internet, television and phone services. Many customers may not have purchased items a la carte, but because of the bundled deal, tend to purchase more and at a higher volume.

This example also ties in well with the concept of marrying complementary products together. You can either use the remarketing strategy to sell your complementary products with accessories and thus generate revenue. Apple uses the re-marketing strategy extensively. Once you buy an Apple product, it continuously updates you regarding similar products or product offerings associated with the purchase.

Share your favorite pricing strategy that you may have used, and why it was successful. Do you agree with the strategies highlighted above, originally compiled by

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Thanks for reading, and until next time… stay WISE!


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