Demand based pricing

Demand based pricing is any method that uses the consumer's percieved value as the main point for their pricing

Price Skimming

This is setting the initial price as high as consumers are willing to pay. After all the consumers who are willing to buy at the maximum price have bought the good, the firm lowers the price to the maximum that another group of consumers is willing to pay. The firm keeps doing thisM and makes the price lower and lower so that they receive the maximum amount of revenue that they can get. This also helps to stop other firms entering the market at a lower price as the price is constantly dropping.

Penetration Pricing

This is entering a new market with a very low price. This helps the firm to gain recognition in the market as well as getting it some initial customers that can help the form survive while it builds up. This takes place commonly for new firms in the market as it can help them grow bigger so that they are not eliminated from the market immediately.

Comment Stream

2 years ago

Kean nice work on the theory. Would be better if more visual...I am sure it will be an excellent tool when teach the other groups.