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Pricing Strategies

SME
Medical and Surgical Instruments
From Egypt
To India
239 views / 0 experts
Jan 26, 2023

What are pricing strategies?

1 answer

Jan 26, 2023
  • Market-driven pricing is the most common approach to export pricing. Under this strategy, you keep your product’s price flexible and responsive to market conditions like demand and supply, inflation etc. This is particularly useful for commodities/products for well-established and stable markets; but remember too much exposure to market forces can also cause instability in your pricing.
  • Skimming pricing involves you charging a higher price for your product to recover preliminary expenses and reap high profits but decreasing it to increase market share. Again, this is better adopted with products with established markets or high demand, as customers in a new market might not be open to paying high prices initially.
  • Penetration pricing requires you to charge a low price to penetrate the market and weed out competition. This policy is often used for items of mass consumption and is also called ‘dumping’.
  • Pre-emptive pricing is like penetration pricing, except the exporter’s sole aim here is to discourage competition. Pre-emptive pricing may mean fixing your price lower than the cost of the product, on the assumption that in the long run, market domination will help generate profits. Both penetration and pre-emptive pricing are high-risk strategies, but if effectively managed, they can have high payoffs in the form of market domination and virtual monopolies. 
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