Step 3: Set Standard Price Adjustments

With the first round of pricing decisions now complete, the marketer’s next step is to consider whether there are benefits to making adjustments to the list or published price. For our purposes, we will consider two levels of price adjustments – standard and promotional. The first level adjustments are those we label as “standard” since these are consistently part of the marketer’s pricing program and not adjustments that appear only occasionally as part of special promotions (see Step 4: Determine Promotional Pricing).

In most situations,  standard adjustments are made to reduce the list price in an effort to: 1) stimulate interest in the product, or 2) indirectly pay channel partners for the services they offer when handling the product. In some circumstances, the adjustment goes the other way and leads to price increases in order to cover additional costs incurred when selling to different markets (e.g., higher shipping costs).

It should be noted, that given certain circumstances, organizations may not make adjustments to their list price. For instance, if the product is in high demand, the marketer may see little reason to lower the price. Also, if the marketer believes the product holds sufficient value for customers at its current list price then they may feel reducing the price will lead buyers to question the quality of the product (e.g., “How can they offer all those features for such a low price? Something must be wrong with it.”). In such cases, holding fast to the list price allows the marketer to maintain some control over the product’s perceived image.

For firms that do make standard price adjustments, options include:

  • Quantity Discounts
  • Trade Allowances
  • Special Segment Pricing
  • Geographic Pricing
Setting Price: Part 2 Tutorial
Price Adjustments: Quantity Discounts