Value-Based Pricing and Pricing Strategies - Cost-based pricing versus market-based pricing - Market-based PLC pricing

7 important questions on Value-Based Pricing and Pricing Strategies - Cost-based pricing versus market-based pricing - Market-based PLC pricing

What are the six market-based PLC pricing strategies?

  1. Skim pricing
  2. Value-in-use pricing
  3. Perceived value pricing
  4. Multi-segment pricing
  5. Strategic account pricing
  6. Plus-one pricing

What is a skim PLC pricing strategy? When it is used?

In the beginning, the product will have a high price to satisfy the high-priced segment. After that, the price will gradually lower to attract more customers and will eventually reach a level that is affordable for almost everyone.

  • Can only be used when a product is exclusive (patent).
  • It is used in the early stages of the PLC.
For example, Apple.

What is a value-in-use PLC pricing strategy? When is it used?

A price is set to provide customers with attractive savings after considering the life-cycle costs of acquiring, owning, using, maintaining, and disposing of the product.
  • It is used as the business moves into the growth stage of the PLC.
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What is a perceived-value PLC pricing strategy? When is it used?

This strategy is based on competitive advantage: either the product performance, service quality, or brand reputation of the company. Perceived value > price.
  • It is used in the growth stage of the PLC.

What is a multi-segment PLC pricing strategy? When is it used?

A strategy where different customers are targeted at different prices. There are price-sensitive segments (attracted to low prices) and quality-sensitive segment (pay more for extra benefits).
  • It is used in the growth stage of the PLC.

What is a strategic account PLC pricing strategy? When it is used?

The price is customised to the unique needs of a strategic customer and competitive market conditions. The goal is to maintain a B2B relationship.
  • It is used at the end of the growth stage of the PLC.

What is a plus-one PLC pricing strategy? When is it used?

When a business' product position is about the same as competitors' positions in every area of the product and service quality, except that in one area of meaningful performance the business' product is clearly superior.
  • It is used in the mature market of the PLC.

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