High-Low Pricing Strategy

August 25th, 2023

What's companies still use this type of pricing?


Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.

According to Wikipedia, high-low pricing (or hi-low pricing) is a type of pricing strategy adopted by companies, usually small and medium sized retail firms. It is a type of pricing where a firm charges a high price for an item and later will sell it to customers by giving discounts or through clearance sales. The basic type of customers for the firms adopting high-low price will not have a clear idea about what a product‘s price would typically be or must have a strong belief that “discount sales = low price” or they must have strong preference in purchasing the products sold in this type or by this certain firm.

There are many big firms using this type of pricing strategy (ex: Reebok, Nike, Adidas). The way competition prevails in the shoe industry is through high-low price. Also, high-low pricing is extensively used in the fashion industry by companies (ex: Macy’s, Nordstrom…).  This pricing strategy is not only in the shoe industry but also in many other industries. But, in these industries one or two firms will not provide discounts and works on fixed rate of earnings those firms will follow everyday low-price strategy in order to compete in the market.

If you’d like to learn more about how SafeSourcing can assist in properly analyzing the total cost of your annual purchases, please contact a SafeSourcing customer services associate.

Sourced: http://en.wikipedia.org/wiki/High-low_pricing 

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