Definition: Apart from the four basic pricing strategies -- premium, skimming, economy or value and penetration -- there can be several other variations on these.

Description:

What is psychological pricing?

A price of Rs 9.95 is a psychological price, such that the customer feels he hasn't paid Rs 10, which may sound high, but less than that. At the end of the day, the customer still pays Rs 10, since India doesn't have 5 paise coins, but this price addresses the emotional rather than the rational side of the customer. Bata has been using this pricing for several years for its shoes.

What is product line pricing?

When there are several items in a product line, buying a series of them as a package could be cheaper than buying each separately. For example, Lux soap, Lux skincare and Lux shampoo; buy them in one set, it'll be cheaper than buying individually.

What is Captive pricing?

In this strategy, the manufacturer will price the product low, but the consumables in it will be high since by that time the customer is used to the product. So, initial capital outlay may be low but working capital needed could be high. Blades are an example. While the razor may be cheap, the twin blade or Mach 3 blades are not.

What is bundled pricing?

Selling VCDs with Disc players is bundling two products for a price lower than individually. Other examples are in FMCG, buy mosquito mats, get the machine also at lower cost. This pricing can also remove old stock.

What is geographical pricing?

Prices vary as per location of the sale, taking into account logistics, costs, or even the ability of the market to pay.