Penetration pricing

Definition

Penetration pricing is a marketing strategy where a company sets a lower price for a new product to attract customers and gain market share quickly. Once the product establishes itself in the market, the company may gradually increase the price.

Related terms

Price Skimming: A pricing strategy where a firm charges the highest initial price that customers will pay and then lowers it over time as demand decreases.

Market Share: The portion of a market controlled by a particular company or product, often expressed as a percentage of total sales in that market.

Cost: plus Pricing - A pricing method where the selling price is determined by adding a specific markup to a product's unit cost, ensuring all costs are covered and a profit margin is achieved