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Market-based pricing

This is sometimes known as customer-oriented pricing as the key determinant of price is what customers are willing to pay. This strategy is more difficult to get right than cost-based pricing because the 'right price' for customers is difficult to judge, and may change constantly as markets are dynamic. This pricing strategy may be best suited to markets which are segmented allowing the firm to price discriminate by charging different prices to different groups of consumers.

The main types of market-based pricing are:

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  • Penetration pricing
  • Skimming pricing

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  • Price discrimination
  • Loss leader pricing
  • Psychological pricing
  • Promotional pricing

We look in more detail at these on the next few pages. Click on the right arrow at the top or bottom of the page to look at these strategies in more detail.