Going rate pricing / competition oriented pricing

The price is set close to the level of your main competitor in the market. Competitors pricing quite often has the most significant influence on the price setting decision. This strategy is often called 'follow the leader' and it is essential that costs and profit are monitored under this strategy. The young designer may see a direct competitor or perceive their item to be very different from those of rival designers.

Perceived value /

psychological pricing

This involves charging what, according to your own research, the market will accept based upon the consumers perception of the product. Thus understanding the consumer’s perceptions of your product or service can provide information regarding their ceiling in terms of what they are willing to pay. This approach recognises that consumers have a predetermined price range within which they are happy to purchase goods and services. Thus price is set within this range. This would be suitable for a designer of exclusive items.

Loss leader / decoy pricing

An example of a loss leader would be where supermarkets reduce the price of one product to attract customers who will then buy other products. Examples of decoy pricing would be in the restaurant business where the business has high levels of beef in stock compared to chicken. The focus would be to increase the price of chicken to encourage customers to buy the beef.

Two-part pricing

This would be where a low basic price is charged to gain access but then charge for additional services once the consumer has the basic product. Not likely suitable for the young designer.

Camouflage pricing

This is where businesses try to ensure that customers cannot compare their prices to competitors.

Price lining

Setting up a number of distinct prices for a product range. For example Jackets €200, €350 and €500.

Odd / even pricing

Odd pricing uses prices like €9.99 to give impression of lower price (perhaps not advisable for designer items) while even prices are used to give impression that price in not the most important factor (more suitable for designer items).

Multiple unit pricing

Providing discount for two or more items (again may not be suitable for designer items)

Complementary goods

Promotional price for one item may encourage purchase of complementary products at full price.

Fixed / flexible pricing

Designer items should have a fixed price where the price set is the only acceptable price and will not be bargained down. Flexible pricing allows for the expectation that price can be negotiated down or a bargain struck and may affect the image of the designer.