Business Insights

Setting the Right Price for your Products

Brent Kelly
Published on

Pricing your products for the Internet is extremely important. Any introductory marketing course will teach you the four P’s of marketing - Product, Price, Placement and Promotion. Price is one of the keys to successful marketing. The first step to establishing pricing for the Internet is setting your pricing objectives. What are you trying to achieve through your pricing?

  • Maximum Profits

    Are you trying to generate the maximum amount of profit possible? This will often mean setting prices a bit higher than your initial ‘gut feeling’. So are you willing to lose some potential customers by pricing your products/services a little higher to generate more profit overall?
  • Market Dominance

    Is market dominance your key objective? Do you want to become one of the major players in the market? This will generally mean pricing at the lower end of the spectrum.
  • Accessibility

    Is there a charity element to your vision? Is the main objective of your pricing to make your product accessible to the average customer?

You need to take into consideration many other elements when setting your price, such as:

  • Strength of your brand
  • Competition
  • Target market
  • Unique Selling Proposition
  • Customer demand.

Remember – many people have the expectation that they should be able to get the product cheaper on the web, so the prices displayed on your web page design should reflect this.


Pricing techniques


  • Skimming pricing – price high with new products to target ‘early adopters’ that are not price-sensitive. Skim the price repeatedly as the product gains market acceptance
  • Penetration pricing – set your price as low as possible to maximise market penetration
  • Prestige pricing – price to give the product the appearance of high quality
  • 99.95 pricing – price at either $99.95, $97 or $95 rather than $100
  • Demand-based pricing – price is based on what the market is willing to pay
  • Mark-up pricing – price at the cost price of the items plus a markup
  • Traditional pricing – product has always sold for a certain price so price remains the same today also
  • Loss-leader pricing – take a loss on the first sale in order to establish a relationship with the customer – make profits on subsequent purchases
  • Negotiated pricing – price based on negotiation. This is typically used with account customers (business to business relationships)
  • Merchandising pricing
    - Quantity discounts
    - Seasonal discounts
    - Rebates
    - Trade discounts
    - Cash discounts
Brent Kelly
Published on

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