Captive Product Pricing
Companies that make products must be used along with a main product are using captive Product pricing. Examples are razor-blades, camera film, and computer floppy. The prices of main products are kept on the lower side and the prices are comparatively higher for the next part.
Polaroid prices its cameras low because it makes its money on the film it sells. And Gillette sells low-priced razors but makes money on the replacement blades. Camera makers who do not sell film have to price their main products higher in order to make the same over all profit.
In case of services, this strategy is called two-part pricing. The price of the service is broken into fixed fee plus a variable usage rate.
Thus, telephone company charges a monthly rate the fixed fee plus charges for calls beyond same minimum number the variable usage rate.
By - Product pricing
In pricing of some products there are some residue products which are called as by products. If the by products have little value and are in fact costly to dispose other manufacturer should accept any price that comes more than the cost of disposing them. The by products have values to the customer groups, and then they will give price on value. The revenue earned on the by products will make it easier for the company to charge a lower price of the main product if the competition is intense. For example, while processing of crude oil we get petrol as the main product and some by products also come out as diesel, Kerosene out, coal tar etc. These prices of by products are kept on the lower side.
Product - Bundle Pricing
It calls for setting the prices of a bundle. Bundle pricing is less than the individual item pricing. Price bundling can promote the sales of the products consumers might not otherwise buy, but the combined price must be low enough to get than to buy the bundle.
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