SUPER HIGH VALUE HIGH VALUE PREMIUM

High
• Product 4 • Product 1 • Product 10
KOTLER’S MATRIX

PRODUCT QUALITY
Products Product Quality Price
GOOD VALUE MID VALUE OVERARCHING
Product 1 High Med
• Product 2 • Product 8 • Product 9
Product 2 Med Low
• Product 5
Product 3 Low High

Product 4 High Low

Product 5 Med Low

Product 6 Low Med

ECONOMY FALSE ECONOMY RIP-OFF
Product 7 Low Low

Low
Product 8 Med Med • Product 7 • Product 6 • Product 3

Product 9 Med High

Product 10 High High

Low PRICE High

PRICING
1
STRATEGIES
 GOOD FOR
• Technology

PREMIUM PRICING • High-end product &

services
• Luxury goods
Also known as luxury or prestige pricing, this is when companies price products high to present an image of high-value,
luxurious, or premium. It focuses on the perceived value of a product rather than the actual value or production cost. Thus, this
model is a direct function of brand awareness and brand perception. s

Unit Variable Cost $65.00 5000 Projected # of Units Sold

Choose whether your want to apply a percentage-based price or a fixed dollar increase

$700.00 Fixed Dollar Increase Amount Markup % 180%

$965.00 Unit Selling Price Unit Selling Price $742.00

FIXED PERCENTAG
$3,860,000.00 Gross Revenue DOLLAR EBASED Gross Revenue $2,968,000.00

$2,800,000.00 Gross Margin Gross Margin $1,908,000.00

PRICING
2
STRATEGIES
 GOOD FOR
PRICE SKIMMING •
•
Technology products
New products and services

A skimming pricing strategy is when companies charge the highest possible price for a new product and then lower the price over time as the product becomes less and less popular. A
skimming pricing strategy helps recover sunk costs and sell products well beyond their novelty, but the strategy can also annoy consumers who bought at full price and attract
competitors who recognize the “fake” pricing margin as prices are lowered.

Product Cost to Produce: $65.00

Phase 1 Pricing $120.00 Phase 3 Pricing $93.00

PHASE 1

PHASE 3
Projected Units Sold 500 Projected Units Sold 1200

Projected Revenue $60,000.00 Projected Revenue $111,600.00

FINAL TOTAL
Total Projected Units Sold 3600
Projected Gross Margin $27,500.00 Projected Gross Margin $33,600.00

Total Projected Gross Revenue $425,000.00

Phase 2 Pricing $107.00 Phase 4 Pricing $87.00

PHASE 2

PHASE 4 Total Projected Gross Margin $100,000.00

Projected Units Sold 900 Projected Units Sold 1000

Projected Revenue $96,300.00 Projected Revenue $87,000.00

Projected Gross Margin $37,800.00 Projected Gross Margin $22,000.00

PRICING
3
STRATEGIES
 Price

With a marginal cost of $6 and a sale price of $6.05, Company A is

making nominal profits per sale. However, the company is
comfortable with this decision as its goal is to switch customers
$15 over, capture as much market share as possible.

Company A believes that its competitor will not be able to sustain

itself in the long-term and will eventually exit the market. When the
competitor exits the marketplace, Company A will become the only
COMPETITO seller and therefore be able to dominate the market and raise prices
R PRICE to a level that will provide a high profit margin.

Marginal Cost = $6
$6.05

COMPANY A
PRICE

Q1 Q2 Quantity
PENETRATION PRICING

PRICING
4
STRATEGIES
 PRICING DATA COLLECTION

UNIT PRICE MARKET SHARE CUSTOMER VOLUME MARGIN REVENUE PROFIT

$340 100% 50,000,000 -194% $17,000,000,000 ($33,000,000,000)

$650 95% 47,500,000 -54% $30,875,000,000 ($16,625,000,000)

$970 90% 45,000,000 -3% $43,650,000,000 ($1,350,000,000)

$1,300 85% 42,500,000 23% $55,250,000,000 $12,750,000,000

$1,600 80% 40,000,000 38% $64,000,000,000 $24,000,000,000

$1,900 75% 37,500,000 47% $71,250,000,000 $33,750,000,000

$2,200 70% 35,000,000 55% $77,000,000,000 $42,000,000,000

$2,500 65% 32,500,000 60% $81,250,000,000 $48,750,000,000

$2,850 60% 30 000,000 65% $85 500 000 000 $55,500,000,000

PRICING
5
STRATEGIES
 PRICING TABLE

Standard Plus Pro

Licenses Use on 1 Site Use on 3 Sites Unlimited

Unlimited Pop-Ups   

Pop-Up Designs 30 30 30

Exit Pop-Ups   

A/B Testing   

Analytics   

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Support & Update 1 Year & Lifetime 1 Year & Lifetime 1 Year & Lifetime

$47 $77 $97

PRICING
6
STRATEGIES
 BREAK-EVEN ANALYSIS

Sales ($)

Total Revenue

PROFIT
Break-Even Point
Total Cost

Variable Costs

Fixed Cost
LOSS

Unit Sold (#)

PRICING
7
STRATEGIES
 FACTORS RELATING TO FACTORS RELATING TO
MARKET CHARACTERISTICS INTERMEDIARIES CONSIDERATIONS

• Consumer purchasing habits • Sales volume potential

• Location of the market • Availability of intermediaries
• Number of customers • Intermediaries’ attitude
• Size of orders
FACTORS • Cost of channel

AFFECTING
PRICING
FACTORS RELATING TO FACTORS RELATING TO
COMPANY CHARACTERISTICS
DECISIONS PRODUCT CHARACTERISTICS

• Perishability
• Financial strength
• Unit value
• Marketing policies
• Style of obsolescence
• Size of the company
• Standardized products
• Past channel experience
• Purchase frequency

FACTORS THAT AFFECT PRICE IN ANY MARKET AND PRICING DECISION

INTERNAL FACTORS EXTERNAL FACTORS

• Return on investment • Elasticity of demand
• Cash flow • Customer expectations
• Market share • Direct competitor pricing
• Maximize profits • Related product pricing
• Variable costs • Government regulations

PRICING
8
STRATEGIES