Chapter 18: Setting the Right Price

I liked learning about Price Skimming and Penetration Pricing because I can apply these two terms to my daily life. Price Skimming is when the product has a unique advantage and the product is marked up above the average price and people are still willing to pay for the product. I’m a culprit of this because sometimes I think that if the product is priced higher than other similar products then the higher priced item must be better quality so I pay more. I should know better because I actually did a report on generic brands versus name brands and low and behold all products are the same and all approved by the FDA.

Penetration Pricing is when you charge a low price for a product but sell a lot of that product to make the break-even point. I like Penetration Pricing and I like Wal-Mart, they go hand in hand. Who doesn’t like low prices?

I believe Wal-Mart must be value-based pricing or value pricing because they are all about customers. Wal-Mart has set a price at a level that seems to customers, like me, to be a good price, a price that keeps us coming back time and time again. We just can’t get enough of Wal-Mart. Most customers like me know that we don’t need to compare prices with other stores because more than likely Wal-Mart will be the cheapest because they’ve settled on a price that is below their competitors and pleasing to their customers.

I learned about Price lining and Odd-even pricing….interesting. I never would’ve thought sellers would establish a price series such as these two. Now I’ll know when I see an item for sell that they may have three different prices that are marked between certain figures. And how Odd-numbered prices are to connote a bargain and even-numbered pricing are to imply quality. Never knew that and that’s good to know. I’ll be the shopping smarty.