Definition of High-low Pricing
This pricing strategy incorporates pricing the majority of your items above the market and a few of them underneath that rate with the help of discounts and sales.
Description of High-low Pricing
Technology stores that utilize this approach tend to put all of their advertised items on sale at the back of the store, that way shoppers go through the entire store and look at all of the other items prior to reaching the less expensive items.
Advantages of High-low Pricing
This strategy helps bring shoppers into their store by getting their attention with the low priced items, and hopefully they will purchase an expensive item there as well. If customers end up buying a few extra full priced products alongside those with a discount, this strategy can help immensely increase profit. This is also a great marketing strategy since you always need to be promoting those items that are on sale.
Disadvantages of High-low Pricing
You do have the chance of losing profit, though, if you don’t put the less expensive items in the right place or if your customers are more price conscious since you’ll actually end up losing money with this strategy. It’s also fairly expensive to have constant marketing campaigns going on.