Pricing strategies that simplify how to price a product


This guide outlines several pricing strategies to choose from when you want to know how to price a product.

Marketing must include the “right” prices for the customer to make a purchase decision. Proper pricing strategies allow you to increase profits and increase the effectiveness of promotion, regardless of whether you offer a new product, launch an online store, or start a marketplace.

Pricing strategies for how to price a product

Price and value: EDLP pricing strategies

The EDLP model (every day low price), in which the network consistently assures cheap pricing, thereby speaks for itself. It is more accurate to identify such a strategy as “low prices every day” because it is actually physically impossible to guarantee such pricing because you would need to implement an entire business infrastructure to track prices in the marketplace. Such a tactic entails:

  • regular market tracking of pricing for the majority (or all) of the chain’s selection;
  • strict guidelines for responding to market price movements;
  • higher purchasing power;
  • dependable point-of-sale procedures and logistics (stock maintenance, stable displays, etc.).

Discounted promotions: HL/P pricing strategies

The HL/P(high low) approach to pricing strategies suggests additional flexibility in pricing decisions since prices can be set above or below the market (including those of rivals using an EDLP strategy). In circumstances when the product price is greater than that of rivals without EDLP, the opposite imbalance of price and value is made up for by frequent promotions and specials. Businesses that choose the HL/P approach frequently understand how to effectively manage marketing initiatives and clearly monitor product demand in relation to financial success.

In order not to “lose” with such a strategy, it is important to:

  • Properly manage the composition, volume, and timing of promotional events and sales cycles;
  • Properly assess the competitive environment and pricing strategies of players in the marketplace;
  • Develop the remaining 4P factors to compensate for the price-price imbalance.

The most common problem with the HL/P pricing strategies is the uncontrollable amount of discounts and promotions. A company always wants to increase the discount period (Lo period) or inflate regular prices (Hi period). The most difficult to assess the overall effect of such a strategy is the sum of the effectiveness for the period Hi and for the period Lo. Both periods are stretched over long periods of time and external (seasonality, competitive environment, etc.) and internal (e.g., availability of runoff) factors begin to influence.

An important advantage of this strategy is higher margins, unlike EDLP, because HL/P covers a wider segment of customers – those who are not sensitive to high prices, and those who respond directly to discounts and sales. And expanding the circle of customers leads to an increase in market share.

Which are the better pricing strategies: EDLP or HL/P?

Pricing strategy can have an immediate impact with little financial outlay, but this only indirectly affects the approach of choice. It is crucial to stress that EDPL or HL/P will only provide the desired “reaction” in the long run. For the customer to develop the “correct” perception of the price policy, numerous sales cycles lasting two to three years will be necessary. The network may regularly lose margins in the short arm during this time, or alternatively, it may experience rapid expansion.

  • The corporation should consider such changes as financial and temporary investments, whose volume cannot always be forecast with adequate accuracy if it chooses a certain price plan;
  • There are no “good” or “poor” pricing strategies, thus if management still wishes to move in spite of this, it should be led by the following considerations;
  • The HL/P strategy expects that its rivals have an EDLP approach or something similar. It’s critical to realize that price strategy is a weapon used by market players to compete for customers. The strategy is thus chosen keeping the competitive situation in mind;
  • The EDLP strategy aims to save clients money, whereas the HL/P approach prioritizes quality (not only of the product but also of the service);
  • The HL/P approach may be more successful if a firm deals in items with low purchase discreteness since the client does not constantly monitor pricing. In contrast, everyday purchases are made in the food retail sector.

The state of the economy in the area where the network is located must be taken into account. Customers may prioritize cheap costs during a crisis in that nation, which will provide businesses using an EDLP approach an extra boost for growth.


Product pricing strategies and business marketing strategy are parts of the same process. Connecting them intelligently is the key to increasing sales, building a loyal customer base, and remaining sustainable in the marketplace.

Photo by Miguel Á. Padriñán



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