Question

Good detail on pricing, and there is alot to study on this topic! Arriving at a final price for your product/service is a complex process and it goes much deeper than comparing to competitors. A good pricing strategy helps a company determine the price point at which they can maximize profits on sales of products or services. When setting prices, a business owner needs to consider a wide range of factors including production & distribution costs, competitor offerings, positioning strategies & the target customer base. While customers won't purchase goods that are priced too high, your company won't succeed if prices are too low to cover the business' costs. Along with product, place and promotion, price can have a profound effect on the success of your small business. what are some similarities and differences between skimming pricing, prestige pricing, and above-market pricing? Which one are you most familiar with?

Answer 1

similarities in skimming, prestige, above market

These three pricing strategies involve setting a premium price for a product, hoping that consumers will associate high quality with high price.
most effective when demand is inelastic-no other like its kind

differences in skimming, above market pricing, and prestige pricing

-Frequently, a skimming price approach is used when there are no competitively positioned products, and therefore, no prices, to use as a benchmark.
-An above-market price strategy requires a competitive reference point or price.
-Prestige pricing typically requires a greater subjective component than the other two methods.

skimming

setting the highest initial price that customers desiring the product are willing to pay companies should use this pricing when prospective customers are willing to by the product immediately at the initial high price, competitors should not be able to enter the market easily and undercut price, and the products quality and image are supported by a higher price