4.10 Pricing strategies - Word Drop

Competitive pricing means charging a price that is ______ to the prices charged by rivals. This avoids losing customers on price alone, but matching the lowest prices can mean low ______ or even a loss, as only a small amount is left after costs. It is also harder to ______ from rivals when every business charges about the same price.

Psychological pricing sets prices just below a round figure, such as £1.99 instead of £2.00, so they seem lower than they really are. This encourages sales and builds a reputation for good value. However, customers may become ______ to the trick, and rounding becomes difficult when ______ by a percentage.

Price skimming sets a ______ price at launch, so only customers who can afford a lot buy at first, and the price is reduced over time. This can maximise profits and create a perception of ______. However, the price may ______ some customers, and it leaves room for competitors to ______ on price with a newer product.

Price penetration sets a low price at launch, then ______ it gradually. The low price attracts customers, and they may stay ______ to the business after the price rises. The drawbacks are low profits at first and no guarantee that customers will continue to ______ when it becomes more expensive.