Definition of Penetration Pricing
It’s a marketing method that companies use to bring in shoppers to purchase a new item or service by setting a low price for a new item at the beginning in order to take customers from rivals.
Description of Penetration Pricing
This method causes you to lose some money initially, but once you’ve got a loyal customer base, you can start increasing your prices.
Advantages of Penetration Pricing
Turn the attention away from rivals and onto you with it. It’s also a great way to boost market share and the amount of sales. With an increase in the number of sales, your production expenses will decrease.
Disadvantages of Penetration Pricing
An increase in the amount of sales won’t be beneficial if your prices remain low. Also, since the prices will raise in the long run, customers will stay while they are low but then switch to a competitor once they start rising.