Principles of Marketing, 17/e

New Product Pricing Strategies

Author Comment

Pricing new products can be especially challenging. Just think about all the things you’d need to consider in pricing a new smartphone, say, the first Apple iPhone. Even more, you need to start thinking about the price—along with many other marketing considerations—at the very beginning of the design process.

Pricing strategies usually change as the product passes through its life cycle. The introductory stage is especially challenging. Companies bringing out a new product face the challenge of setting prices for the first time. They can choose between two broad strategies: market-skimming pricing and market-penetration pricing.

Market-Skimming Pricing

Many companies that invent new products set high ...