A pricing strategy refers to the approach and guidelines used to determine the prices of goods and services offered by a company. The key elements of a pricing strategy include:
- Pricing objectives – Profit maximization, revenue targets, gaining market share etc.
- Target customer/segment – Pricing varies based on customer value, sensitivity, loyalty programs etc.
- Competitive analysis – Understanding competitors’ prices, product positioning etc.
- Pricing tactics – Methods like cost-plus, psychological pricing, premium/penetration pricing etc.
The goal is to optimize revenue and profits over time through Dynamic pricing, bundling, discounts and other levers. Factors like costs, demand, competition and product life cycles influence strategy development.
Continuous monitoring ensures effectiveness. Well-crafted pricing strategies balance profitability with perceived value to drive optimal volumes and customer lifetime worth.