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15 useful retail pricing strategies

15 Useful Retail Pricing Strategies

Learning the best tactics and making valuable changes to business strategies and types of selling  is best done through trial and error.


Using a markup price and changing it for different reasons could benefit retailers, according to the law of supply and demand in economics.


Learning the basics of pricing will benefit you. Some sellers are more streetwise than any educated person, so don’t be outsmarted.


Instead, use these different retail pricing strategies whether in digital product ideas to sell online, and don’t forget the difference between list price vs. selling price

Why is retail pricing strategy important?

Being consistent in retail pricing has a direct impact on a business’s profits and customer behavior.


On the contrary, proper pricing can attract customers and boost sales. If you didn’t notice that you input incorrect pricing, it will have negative impacts, such as revenue loss and damage to the brand’s reputation.


To stay competitive, maximize profits, and build strong customer relationships, businesses must understand the importance of retail pricing.

Retail pricing strategies 

Ensure your business pricing strategy is needed most. Don’t worry if the pricing strategy fails, in business it is also an ongoing process to achieve the exact retail pricing strategy.

1. Penetration pricing

Penetration pricing is like a “grand opening sale” for a product or service. When a company launches something new, they offer it at a low price to get lots of people interested. The idea is to quickly build a customer base and gain attention in the market. As more people buy the product and recognize its value, the company might gradually increase the price to make more money.

2. Premium pricing

Imagine you’re in a store, and you see two similar products: one is plain, and the other looks fancier with better packaging and design. The fancier one might cost a lot more with premium pricing. Companies use this strategy when they want their product to be seen as a special, top-quality, or luxury item. They charge a higher price to make people think it’s worth the extra cost.



3. Competitive pricing

In a crowded market, companies don’t want to be too expensive or too cheap compared to their competitors. Competitive pricing is like staying in the same “price neighborhood” as similar products. If people see similar products with similar prices, they might choose based on other factors like brand reputation or features.

4. Cost-plus pricing

Cost-plus pricing is a straightforward way to figure out how much to charge for something. Say it costs a company $5 to make a widget, and they want to make a 20% profit. They add $1 (20% of $5) to the cost, making the selling price $6. This way, they cover their costs and make a little extra money.

5. Psychological pricing

Have you ever noticed that most prices end in 99 cents instead of rounding to the next dollar? That’s because people tend to focus on the first number they see. $9.99 seems cheaper than $10, even though it’s just one cent less. Companies use this tactic to make prices look more attractive to customers.

6. Dynamic pricing

Imagine you’re looking to buy a plane ticket online, and the price changes every time you check. That’s dynamic pricing. Companies use complex algorithms to adjust prices based on factors like demand, time of day, and even your browsing history. They want to charge the highest price you’re willing to pay.

7. Bundle pricing

When you go to a fast-food restaurant and see a combo meal that includes a burger, fries, and a drink at a lower price than buying them individually, that’s bundle pricing. Companies want you to buy more things from them, so they offer attractive deals when you get a package of products together.

8. Freemium model

The freemium model is like a “try before you buy” approach. Companies offer a basic version of their app, software, or service for free. If you like it and want more features or benefits, you can upgrade to the premium version, which you have to pay for.

9. Price skimming

When a brand-new, hot product comes out, some people are willing to pay a premium to have it first. Price skimming takes advantage of this by starting with a high price at the product launch. As demand from these early adopters cools, the company gradually lowers prices to reach a wider audience.

10. Loss leader pricing

Have you ever seen a store advertise an item at an unbelievably low price? They might sell it as a “loss leader” to get you in the door. The company knows they’ll lose money on that particular item, but they hope you’ll buy other things with a higher profit margin while you’re there.

11. Pay-what-you-want pricing

This is a fun and unusual approach. Instead of setting a fixed price, companies let customers decide how much they want to pay for a product or service. It can be used for special occasions or for supporting charitable causes.

12. Subscription pricing

With subscription pricing, it’s like paying for a membership to access something regularly. For example, you might pay a monthly fee to watch movies on a streaming platform or to get regular deliveries of your favorite snacks.

13. Price discrimination

Price discrimination is when companies charge different prices to different groups of people. For instance, students might get a discount on movie tickets, or airline tickets might be cheaper if you book them far in advance.

14. Geographical pricing

Geographical pricing considers differences in costs, taxes, and market conditions in different regions. So, your price for something might vary depending on where you live.

15. Seasonal pricing

You’ve probably noticed how prices change during different times of the year. During holidays or special events, companies might offer discounts or sales to encourage more people to buy, while in quieter seasons or lean seasons, they might have lower prices to attract customers.

A step-by-step guide to help you calculate your pricing strategy effectively:

There are many ways to calculate pricing strategy to determine the selling price. Here is an example to understand more.

15 useful retail pricing strategies



Let’s say you run a small business that sells handmade candles. You want to calculate the selling price of each candle to ensure you cover all costs and make a profit.

Step 1. Calculate the Total Cost Suppose the cost of materials to make one candle (COGS) is $2.50. Additionally, you have other operating expenses, including labor, packaging, and marketing, which amount to $1.50 per candle.

Total Cost = $2.50 (COGS) + $1.50 (Operating Expenses) = $4.00 per candle

Step 2: Determine the Desired Profit You want to achieve a 30% profit margin on the total cost.

Desired Profit = 30% of $4.00 = 0.30 * $4.00 = $1.20 per candle

Step 3: Calculate the Selling Price per candle. To calculate the selling price per candle, add the total cost and the desired profit:

Selling Price per Candle = Total Cost + Desired Profit Selling Price per Candle = $4.00 + $1.20 = $5.20

So, to cover all costs and achieve a 30% profit margin, you would need to sell each candle at $5.20.

For instance, if you produce and sell 100 candles, your total revenue would be:


Total Revenue = Selling Price per Candle × Number of Units Total Revenue = $5.20 × 100 = $520

By selling 100 candles at $5.20 each, you would generate a total revenue of $520. From this total revenue, you can subtract the total cost to find your profit:


Total Profit = Total Revenue – Total Cost Total Profit = $520 – ($4.00 × 100) = $520 – $400 = $120

In this example, you would profit $120 by selling 100 candles at the calculated selling price of $5.20 per candle while covering all your costs.


You may wonder why Chinese people lowered their prices instead of increasing them. The secret is to use the best retail pricing strategy to benefit the retailers and help them return for a reasonable price. The more customers attract their pricing strategy the more it will return for the next transaction. We all know that in business, having a supplier with lower prices is a pretty good deal. In the market, businesses have different reasons and tactics. Apple’s pricing strategy remains expensive, yet its market is still increasing because of the high product demand.


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