Market penetration pricing strategy how to#

This strategy works best when you are the first entrant, or one of the first entrants, into a market. Low pricing is often justified to quickly grow a new market and to gain the largest share as the market grows. No company wants to lose market share, and if you lower your price in an effort to gain market share, your competitors are likely to lower their prices just to keep their share.Ī more appropriate and common use of penetration pricing is to speed up the growth of a newly forming market. It can be used to gain market share relative to your competition - but be careful. Penetration pricing means pricing more aggressively than neutral. A better way to look at this is that these are pricing strategies to define the general level of prices. These certainly are pricing strategies, but they are not the only ones. Do a Google search on 'pricing strategy,' and you'll find the same answer over and over: neutral, penetration, and skimming. When you ask a marketer 'What are some pricing strategies?' you will likely get the answer that there are three pricing strategies: neutral, penetration and skimming. They are your pricing processes and policies. Remember that pricing strategies are big-picture decisions that provide guidance to the people within your organization who actually set prices. Price may not be the basis of your corporate strategy, but you must have a pricing strategy to implement your corporate strategy. In this edited excerpt, he explains several important pricing concepts.

Market penetration pricing strategy how to#

In Impact Pricing: Your Blueprint for Driving Profits from Entrepreneur Press, pricing expert Mark Stiving offers practical advice to business owners on how to price products and services.