Pricing is one of the four elements of the marketing mix, along with product, place and promotion. An effective pricing strategy is vital for companies who wish to achieve success by finding the price point where they can maximize sales and profits. Companies may use a variety of pricing strategies, depending on their own unique marketing goals and objectives – and also on which industry they represent. Price setting and price getting require discipline, not luck. Companies differ substantially in their approach to price setting but most (whatever the industry) use one of these three strategies: cost-based pricing, competition-based (dynamic) pricing or value-based pricing.

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GET SMARTER AT PRICING
BlackCurve helps businesses fine tune their pricing

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What are The Most Popular Pricing
Strategies by Industry Sector?

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Most Popular Pricing Strategies
Price se(ng requires discipline, not luck. Companies differ substanKally in their
approach, but most (whatever the industry) use of these three strategies:
Cost-­‐based
Pricing
Dynamic
Pricing
Value-­‐based
Pricing

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Manufacturing
The most popular pricing strategy used within manufacturing is cost-­‐based pricing.
COST-­‐BASED PRICING CAN BE OF THREE TYPES
1. Cost-­‐plus pricing is a strategy whereby you add
together the direct material, labour and overhead costs
for a product, and add to it a markup percentage (to
create a profit margin) in order to derive the price of
the product.
2. Mark-­‐up pricing is the pracKce of adding a constant
percentage to the cost price of an item to arrive at its
selling price.
3. Planned profit pricing is very suited to manufacturing
businesses. A manufacturer oWen has the ability to
increase or lower producKon depending upon the
demand or profit available.

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The Advantages of Cost-­‐based Pricing
Ensures a steady and consistent
rate of profit generaKon.
It allows the manufacturer to
consider how various levels of
output can affect the product
price.
A straighXorward and simple
strategy.
Ensures that all producKon and
overhead costs are covered
before profits are calculated.

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The Disadvantages of Cost-­‐based Pricing
It ignores the customer demand
for the product, as well as how
scarcity could drive up prices.
It encourages compeKtors to
enter the market with a lower
price.
It does not account for the value
the product gives the customer.
If costs are reduced, it encourages
prices to be reduced as well.

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Travel, Hospitality, Ecommerce, Retail
The most popular pricing strategy used in these industries is dynamic pricing.
THERE ARE THREE BASIC WAYS TO DO THIS
1. Use of price intelligence to re-price based on the
prices of competitors.
2. A drop in prices when demand is low.
3. An increase in prices when demand is high.
“The goal is to find the highest price that consumers are
willing to pay”.

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Examples of Dynamic Pricing in PracKce
Sports Ackets have to factor weather, date of the game,
date of purchase, and opponent. When a team is on a
winning streak for example, fans will be willing to pay more.
Theatre Ackets can be reduced if a show has not proved to
be as popular as others on offer – and/or staged at less
popular Kmes.
Taxi companies regularly apply higher rates during peak
Kmes or when booking is higher e.g. when it’s raining.
Airlines change prices depending on the day of the week,
Kme of day, advanced booking, how many seats a flight has,
and average cancellaKons on similar flights.

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Price PercepKon @ The Online Retailer Amazon
According to an analysis by Boomerang Commerce, a
dynamic pricing company:
"Amazon may not actually be the lowest-­‐priced seller of a
par9cular product in any given season," the report reads, "but its
consistently low prices on the highest viewed and best-­‐selling
items drive a percep9on among consumers that Amazon has the
best prices overall."

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Other Industries
Value-based pricing sets prices on the value, perceived or estimated, to the
customer rather than on the cost of the product or historical prices.
Where it is successfully used, it will improve profitability due to the higher prices
without impacting greatly on sales volumes.
WHERE IT IS MOST USED
Necessity
e.g. medical
supplies
Emo9ons
e.g. the latest
fashion
Shortages
e.g. drinks at a
fesKval
Indispensible
e.g. mobile
phones

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Conclusion
Businesses can use a variety of pricing strategies when selling a product or service.
To stay ahead of the competition, it’s important to constantly be tweaking, testing,
and striving to reach an optimum price point for your goods and services.
One strategy that worked one month or one year, may not be suitable for the next
year.
Collect data, analyse whether pricing changes are making a positive impact on your
business, keep abreast of the competition and market changes, and remember
pricing is a journey.
There will always be quick wins as well as longer term decisions.

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PRICE MANAGEMENT AND CONFIGURE PRICE QUOTE (CPQ)
SOFTWARE
Perfect for businesses who are over reliant on spreadsheets to manage their pricing.
Perfect for companies wishing to reap the rewards from more advanced pricing
strategies to grow their profitability. Perfect for organisaKons seeking to opKmise
their prices.
Meet BlackCurve
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PRICE MANAGEMENT &
OPTIMISATION
An easy to use soluKon to
implement and fine tune
your pricing.
CONFIGURE PRICE QUOTE
(CPQ)
A quoKng system for
complex products, pricing or
channels.

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@blackcurveHQ
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STATEMENT OF CONFIDENTIALITY AND LIMITATION
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