Pricing Methods

There are three ways for a business to set their prices: 

• Cost-based: adding a percentage mark-up to costs of production. 

• Market-based: what consumers are willing to pay determined by market forces of supply and demand.  

• Competition-based: set in relation to competitor’s pricing

Once a broader pricing strategy has been determined (skimming, penetration, loss leader, price points), marketers will select a specific method to set the specific price for a product or service..