Product Mix Pricing Strategies I

Product mix pricing strategies guide businesses in setting prices across their product lines to optimize profits. There are five key types.

First is Product Line Pricing. Here, the products within a line are priced differently according to their varying features or quality levels, allowing for diversity in market segments and revenue maximization.

Second is optional product pricing, where companies advertise a low price for the base products and upsell additional features, boosting total purchase value. It appeals to both cost-conscious and value-seeking customers.

Third is Captive Product Pricing. The primary product is priced competitively, and necessary add-ons from the same company are marked up. It ensures sustained profitability.

Fourth is By-product pricing, in which the primary product's cost is offset by the sales of the by-products produced during production. It reduces waste and enhances business efficiency.

Fifth is Product bundle pricing. Multiple products are sold together as a package, with a perceived value higher than the individual products' costs. It helps increase sales, clear unsold items, or introduce new products.