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

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