A price point refers to a specific predetermined price value at which a product or service is priced and offered for sale. It represents the actual monetary amount a customer pays.
- Often selected to end in psychologically appealing numbers like $0.99
- Variations in price points help segment offerings for different markets
- Common to set various price points within a product line for tiers
Factors shaping selection include costs, competitors’ prices, desired profit margins, perceived value and demand estimates at different rates.
Testing sensitivity around price points via promotions or A/B tests provides insights into ideal positions. Multiple trials may be needed to find an optimal point.
Once established, a consistent price point serves as a reference benchmark for consistency, support of perceived worth and simplified communications compared to fluctuating rates.
Overall, strategically placed price points are a fundamental pricing element influencing purchasing decisions across industries.