BTL 903 - Pricing – Types
The Banking Tutor’s Lessons
BTL 903 27-05-2026
Pricing – Types
This lesson contains different Types of Pricing very briefly.
Psychological Pricing
Psychological pricing is a marketing strategy that adjusts
prices to appeal to consumers' subconscious and emotions rather than rational
logic.
Charm Pricing
Charm Pricing (Odd Pricing): Setting prices just below a
whole number (e.g., Rs 99.99 instead of Rs.
100). This exploits the left-digit bias, where consumers subconsciously
perceive the price as being an entire tier lower because they read the first
digit first.
Freemium Pricing
Freemium pricing is a strategy where a company offers a basic
version of its product or service for free indefinitely, while charging a
premium for advanced features, supplemental capabilities, or increased usage
limits. It functions as a blend of "free" and "premium,"
using zero-cost access to lower barriers to entry and drive massive user
acquisition.
Loss Leader Pricing
Loss leader pricing is a strategy where a business prices a
popular product below its market cost to attract customers. The goal is to
drive foot traffic or website visits, incentivizing shoppers to purchase
additional, higher-margin items to generate an overall profit.
Price Skimming
Price skimming is a strategy where a company sets a high
initial price for a new, innovative product to maximize revenue from early
adopters. As demand from this segment depletes and competitors enter, the
company gradually lowers the price to capture more price-sensitive layers of
the market.
Dynamic Pricing (or Surge Pricing)
Dynamic pricing (or "surge pricing") is a flexible
strategy where businesses adjust prices in real time based on market
conditions, demand, and competitor rates.
Penetration Pricing
Penetration pricing is a strategy where businesses initially
set an artificially low price for a new product or service to quickly attract
customers and capture market share. The goal is to entice consumers away from
competitors, generate word-of-mouth buzz, and build a loyal user base, with the
intention of gradually raising prices later.
Price Bundling
Price bundling is a marketing strategy where businesses group
multiple products or services together and sell them for a single, combined
price. This combined price is typically lower than the sum of the individual
items, providing a perceived discount to the buyer while driving higher sales
volume for the company.
Competitive Pricing
Competitive pricing is a pricing strategy where a company
sets prices close to what competitors charge, aiming to stay relevant in the
marketplace and attract customers.
Cost Plus Pricing
Cost-plus pricing is a straightforward strategy where you
determine the selling price of a product or service by calculating the total
cost of production and adding a fixed percentage (markup) for profit. It
guarantees that all expenses are covered and a desired profit margin is
achieved.
Value Based Pricing
Value-based pricing is a strategy that sets prices based on
the customer’s perceived value or willingness to pay, rather than historical
costs or competitor rates. It prioritizes the specific benefits, outcomes, and
emotional value your product provides to buyers.
Economy pricing
Economy pricing is a strategy where a business sets its
products or services at the lowest possible price. The purpose of economy
pricing is to attract cost-conscious customers and keep prices competitive,
rather than spending a lot on traditional or digital marketing or fancy
features.
Subscription Pricing
The subscription business model is where customers pay a
recurring cost at regular intervals (e.g. monthly or annually) for continuous
access to a product or service. This approach best suits businesses that offer
ongoing value or services, where customers need continuous access, such as
software, media or membership-based offerings.
Image Pricing (aka Premium or Prestige Pricing)
Image pricing is the strategy of artificially keeping prices
high to signal exceptional quality, luxury, or status. It exploits the
psychological assumption that expensive goods carry surplus prestige, deterring
customers from looking for.
Sekhar Pariti
+91 9440641014
posted by The Banking Tutor @ May 27, 2026
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