Product Pricing


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Product line pricing

This is a pricing strategy used to sell different products in the same product range at different price points defined by features or benefits. An example of product line pricing can be found at apple inc. Apple produced 6 different version of the ipad and all have different prices. One of the ipad goes for as low as $499 while another goes as high as $829 (Hesseldahl, 2010). The differential features are that, the three of the 6 versions will have 3G, and the other three without. The components for the $499 ipad are estimated to cost $219.35 while those of the $829 are estimated to cost $335 to build.

Optional product pricing

Optional product pricing is the pricing of optional or accessory products along with a main product (Young, 2008). In hotel industry common meals may be priced low while the optional items such as alcohol, beverages, and tobacco are priced high to cater for the foregone profit. Optional product pricing is also common in airline industry where the airlines charges for optional luxuries such as securing a window seat or reserving a row seats next to each other.

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Product bundling pricing

This is a pricing strategy where two or more products are sold at one price, often a discounted price. This strategy is mostly used to sell products that could not have been bought outside the bundle. An example of bundling pricing is when a communication company decides to offer a cable TV bundle that combines cable television, local telephone service, and internet access at a cheaper price compared to the price the customer could have paid for the different products. bundling pricing is also common in streets with adverts such as, ‘buy two suits and get a free shirt and tie’, ‘gift with purchase’, and vacation packages that include travel, accommodation, and a car (Reid and Bojanic, 2009).

References

Baker, W.L. (2010). The price advantage. Washington D.C: John Wiley and Sons.

Hesseldahl, A. (2010). What your gadget really costs: Consumer electronics teardown. Business Week. Retrieved on Nov. 16, 2011 from http://images.businessweek.com/ss/07/01/0118_teardown/index_01.htm

Reid, R. & Bojanic, D. (2009). Hospitality marketing management. Washington D.C: John Wiley and Sons.

Vashisht, K. (2005). A practical approach to marketing management. San Francisco: Atlantic Publishers & Dist.

Young, Et al (2008). Principles of Marketing. New York: Rex Bookstore, Inc.