The cost of producing items

The amount customers are charged for items

The profit earned from selling items

An initially high price charged to customer which will reduce over time

An initially low price charged to customer which will increase over time

A steady price charged to customer regardless of product age

A product is sold at production cost price

A product is sold at less than cost price

A product is sold to make a small profit

Gains market share

Covers costs and breaks even

Allows an organisation to make the largest profit possible

When a business offers different prices to different customers

When a business reduces price to below production cost to clear stock

When a business offers a short term special offer such as buy one get one free to gain interest and increase sales

£7.50

£5.00

£10.00

Loss Leader

Price Skimming

Market Leader

Items are offered at an uneven number to appear cheaper encouraging sales (eg £9.99)

Items are sold using a special promotional offer which is brightly coloured and attracts attention

Items are sold at production cost price to attract customers into the store and increase purchases

To increase profit

To make customers aware of entire product range

To attract new and existing customers and increase sales of other items