Price Discrimination Pricing
Charging a different price for the same good/service in different markets
Requires each market to be impenetrable
Requires different price elasticity of demand in each market
Prices for rail travel differ for the same journey at different times of the day
Penetration Pricing
Price set to 'penetrate the market
'Low' price to secure high volumes
Typical in mass market products-chocolate
bars, food stuffs, household goods, etc. Suitable for products with long anticipated life cycles
May be useful if launching into a new market
Cost Plus Pricing
Cost-plus pricing is a pricing strategy that is used to maximize the rates of return of companies.
Cost-plus pricing is also known as mark-up pricing where cost + mark-up = selling price.
In practice, most firms use either value-based pricing or cost-plus pricing.
Contribution Pricing
Contribution = Selling Price - Variable (direct costs)
Prices set to ensure coverage of variable costs and a 'contribution' to the fixed costs
Similar in principle to marginal cost pricing
Break-even analysis might be useful in such circumstances
Target Pricing
Setting price to 'target' a specified profit level
Estimates of the cost and potential revenue at different prices, and thus the break-even have to be made, to determine the mark-up
Mark-up Profit/Cost x 100
Marginal Cost Pricing
Marginal cost - the cost of producing ONE extra or ONE fewer item of production
MC pricing - allows flexibility
Particularly relevant in transport where fixed costs may be relatively high
Allows variable pricing structure - e.g. on a flight from London to New York - providing the cost of the extra passenger is covered, the price could be varied a good deal to ct customers and fill the aircraft
Absorption Cost Pricing
Full Cost Pricing - attempting to set price to cover both fixed and variable costs
Absorption Cost Pricing - Price set to 'absorb' majorly variable cost and some of the fixed costs of production
Destroyer Pricing
Deliberate price cutting or offer of 'free gifts/products' to force rivals (normally smaller and weaker) out of business or prevent new entrants
Anti-competitive and illegal if it can be proved
Read more -Pricing Strategy Objectives