High-low pricing is a retail pricing strategy where a company initially sets high prices for its products but later discounts them through promotions, sales, or special offers. This strategy aims to attract both price-sensitive customers looking for deals during promotional periods and customers willing to pay higher prices when items are not on sale.
Key features of High-Low Pricing include:
- Regular High Prices: The products are initially priced at a higher level, creating a perception of quality or exclusivity.
- Promotional Discounts: Periodic promotions, sales events, or discounts are offered to attract customers seeking lower prices.
- Psychological Impact: The strategy leverages the psychological impact of perceived savings during promotional periods, encouraging customers to make purchases.
- Creating Urgency: Limited-time offers or sales events create a sense of urgency, prompting customers to take advantage of the discounted prices.
High-Low Pricing is commonly employed in the retail industry, especially in fashion, electronics, and department stores. While it can stimulate sales and attract bargain hunters, businesses need to carefully manage customer expectations and avoid over-reliance on constant discounting, which may impact brand perception in the long term.