It is usually used by big companies since they can afford prices barely above the profit margin. Penetration Pricing Strategy ExamplesĪs we already said, penetration pricing is the common way of setting the prices and bearing in mind the rationale behind it you can already guess that it is mostly used when a company is trying to enter the market or push out competitors from the market. Therefore, we recommend investigating it as well. Since this pricing strategy requires price changes, it’s obvious that it is very connected to dynamic pricing principles. While penetration pricing requires starting with the lowest price possible and then eventually raising the price after the goal is reached, the price skimming strategy consists of starting with a higher price and then lowering it over time. Penetration pricing shouldn’t be considered with the price skimming technique, as those two are opposite. and even to drive competitors out of the market.try to generate a significant demand to utilize economies of scale,.

In this pricing strategy, businesses try to take over some of the customers by picking a price point that is on (or barely above) the profit margin. Penetration pricing is a pricing strategy used by businesses to gain market share by offering a lower price for a product or service. After that, we will answer the question is the penetration pricing a good choice for you, by listing the main advantages and disadvantages of this strategy. In the following paragraphs, we will define penetration pricing and offer some positive and negative examples. Market penetration pricing is thought to be one of the easiest ways to get your share of customers, but is it that simple? There are a few ways to successfully perform this task, and perhaps the most common one is by a penetration pricing strategy. It’s not easy when you try to enter a new market or start selling a product or service while your competitors are already offering something similar.